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Real estate struggles to sell this Diwali. Will it pass the credibility test?

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A recent report released by Anarock indicated that the property market is sitting on unsold stock of 6.56 lakh homes across seven metros.

Real estate developers feel that the significant stock pileup — 6.56 lakh unsold homes including 81,300 ready apartments — could serve as a credibility test for the industry, which is already struggling to sell.
A recent report released by Anarock indicated that the property market is sitting on an unsold stock of 6.56 lakh homes across seven metros — Mumbai, Delhi, Bengaluru, Pune, Chennai, Hyderabad and Kolkata — and nearly 12 percent of these units are in the ready-to-occupy category.
The Mumbai Metropolitan Region accounts for the lion’s share of these completed homes, with 21,000 units unsold and ready to occupy. The NCR market isn’t far behind at 16,800 homes, while Pune completes the top three with 14,260 unsold units. Bengaluru and Chennai, Anarock’s data says, are neck-and-neck, at 10,640 and 10,160 homes respectively, while Kolkata accounts for almost half of those numbers at 5,620 unsold units. Hyderabad brings up the rear at 2,520 completed, unsold homes.
“The number of people operating in the market space over a period of time, will get cleaned up; it is a natural process,” said PNC Menon, Group Chairman, Sobha, speaking exclusively to CNBC-TV18. “This will ensure that developers don’t dump property or buildings in the market; they cannot overcrowd it," Menon added.
While developers admit that deals aren’t being sealed along expected lines this festive season, enquiries are coming in thick and fast. This, they say, is an indication that homebuyers might finally be ready to close transactions.
“I think closures have not yet been materialised but I would say that the amount of interest, which buyers are showing is more than 10 to 20 percent higher than this time last year. Closures, however, have only just started,” said Niranjan Hiranandani, co-founder and MD, Hiranandani Group.
What comes as music to the ears of developers is that an encouraging 35 percent of these 81,300 unsold ready-to-occupy homes lies in the affordable housing segment priced below Rs 40 lakh. Add to this the one percent GST and the generous supply of 90 lakh affordable homes under construction — buying an affordable home could top the festive to-do list this year.
Analysts however are more confident that the 10,000 ready-to-occupy homes in the premium segment (priced above Rs 1.5 crore per unit) will see greater interest.
"It is our learning that luxury can only be sold either at the launch stage or once the project is completed,” said Anuj Puri, chairman, Anarock Property Consultants. “Over the last five to six years, there has been poor sales on the luxury front even as developers have continued to build and complete projects. Now that these apartments have been completed, we are starting to see fresh demand from buyers.”
Nearly two-third of the unsold ready-to-occupy stock of 10,000 apartments, Anarock says, lies in the MMR and NCR markets.
The festive season has thrown up a familiar conundrum for the players in the Indian real estate market: do you read the glass as half-empty or half-full? While there is a massive pileup of unsold stock in both the under-construction and ready-to-occupy categories, developers’ affordable-pricing strategy — especially given the slowdown in new launches — could still make for a strong buyer's market.

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