Unsold units across India
have been weeded out of the market in the last two years. The huge availability in the secondary market is a clear indication of this.
As per Knight Frank’s projections, all the top eight residential markets are anticipated to witness a slight improvement in sales during the second half of 2015. Yet, the yearly sales in 2015 will fall behind that of 2014 across all markets, barring Pune.
NCR comes across as the most affordable market among the top eight cities in India, as 57% of all the new launches in the first half of 2015 were below the ticket size of ₹ 2.5 mn. However, this share is skewed due to the large number of units launched in Gurgaon under the Haryana Government’s affordable housing scheme.
Bengaluru witnessed the l east number (2%) of new launches in the affordable category (ticket size less than ₹ 2.5 mn). That market also had the highest number of project launches in the ₹ 5 to ₹ 7.5 million ticket size.
Despite having a relatively low weighted average price of ₹ 3,500 per sq ft, Hyderabad witnessed only 4% of the new launches below the ticket size of ₹ 2.5 million in the first half of 2015. Nearly half of all the new launches in Mumbai in the first half of 2015 were below the ticket size of ₹ 5 million. This, despite the fact that Mumbai has the highest weighted average price, at ₹ 7,900 per sq ft. The quarters to sell unsold inventory (QTS) is the number of quarters required to exhaust the existing unsold inventory in the market. The existing unsold inventory is divided by the average sales velocity of the preceding eight quarters in order to arrive at the QTS number for that particular quarter. A lower QTS indicates a healthier market.
As per Knight Frank’s market health analysis, Mumbai has the highest number of unsold units in India, at more than 194,000 as of June 2015. However, the NCR market will take the maximum time to liquidate its existing unsold inventory. At the current pace of sales, NCR will take more than four years to exhaust the unsold homes completely.
Pune is currently the healthiest market, with the lowest QTS and a relatively lower age of unsold inventory. The Kolkata market has a QTS comparable to that of Mumbai despite having one of the lowest unsold inventory levels in comparison to the other markets. This can be attributed mainly to the reducing pace of sales, especially in the premium category.
Despite having the least unsold inventory, Hyderabad currently has a high QTS and also suffers with a very high age of unsold inventory. A large number of previously-launched projects still remain unsold in the city. One of the reasons for such a high age of inventory is the fact that homebuyers in this market prefer ready-to-move-in properties; hence, a number of sales materialise once the project is ready for possession.