45% slump in Mumbai home sales: Knight Frank India
‘ Will take almost 3 years to sell unsold inventory ’
Home sales in Mumbai declined by 45 per cent in yearover-year (YoY), with just 18,646 units being sold in the first half of 2020 (H1 2020), while new residential launches also fell by 47 per cent YoY, at 23,399 units. On account of the fall in sales velocity, the quarters to sell for Mumbai Metropolitan Region (MMR) increased from 9.3 at the end of 2019 to 10.8 in
H1 2020, according to property consultant Knight Frank India, which released its halfyearly report on Thursday.
Knight Frank defines quarters to sell unsold inventory as 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. This means it will take roughly 2.7 years to sell unsold inventory in the MMR and there are currently 1,50,054 lakh units pending sale in this region.
Further, the report states, developers have not reduced quoted prices much, as doing so would have larger implications on the project. In oneon-one negotiations on the table with homebuyers, developers have been seen offering discounts upto18 per cent or even more, in some cases. To keep market economics in play during the pandemic, developers are offering many indirect options such as deferred payment plans, assured rentals, EMI waivers, subvention schemes, PLC waivers, and free clubhouse membership. There are some developers offering to bear GST.
Rajani Sinha, Chief Economist and National Director, Research, Knight Frank India, said,"The lockdown has affected the residential sector, which was facing challenges due to slower economic growth, the erosion of endusers’ confidence and the challenges of NPA. The issues are further compounded for both the supply and demand side, as lending activities have reduced since financial institutions have become extremely cautious. Going forward, for the development side of the residential segment, the government’s proactive measures, such as the extension of subsidy schemes, reduction in stamp duty rates, one-time restructuring schemes and changes to FDI policy will be required for the sector to revive. While for the end-users to return to investing in real estate, the government will have to provide long-term financial security.”