Around 77,460 apartments remain unsold in Mumbai, Thane and Navi Mumbai region, says a recent survey from property consultant JLL India. This raises the question: why real estate prices are not falling in Mumbai.
Ashutosh Limaye, national director (research) at JLL India, had an interesting observation to share: only 3.35 per cent of this inventory in Mumbai is actually completed or ready for possession.
"That means buyers who do not want to take the risks of construction delays or approvals delays and developer's financial risk, have little projects to choose from. This is the answer why property prices are not coming down," he said in an interview with NDTV Profit.
Mr Limaye also said buyers have shown a big change in their behavior towards property purchase. "Buyers in today's environment are not willing to take any risks. They either book projects at the launch state, where they are able to take advantage of rates on offer. Only 27 per cent of buyers are buying towards the end of the project when they are sure that projects are getting completed very soon," he added.
This change in buyer behavior has hit the developers hard and resulting in a slowdown in project completion, Mr Limaye says. "As people are not buying during the construction period, developers are not getting cash inflows to put that into construction. With that developers tend to slow down construction."
He cited another factor why residential prices are not falling in Mumbai. "The inventory of 77,000 flats translates into 30 months of inventory, which is very high. But from a developers' perspective, it will take will take 30 months anyway to complete the projects. That means by the time the developers are completing the project they are able to sell them," he added.
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