Poor quality and lack of infrastructure deterred buyers of affordable homes, which contribute the most to the unsold inventory, according to Anarock Property Consultants Pvt. Ltd.
“Most of the unsold supply is at the periphery of the cities, built assuming people will move in despite absence of any social or physical infrastructure,” Anuj Puri, chairman at the real estate consultant, said, adding that potential buyers however aren't willing to compromise on infrastructure connectivity. Also, “well sold-out apartments on paper are sub-standard in reality", Puri said. The developers primarily focused only on price points but haven't prioritised design and location as driving factors, he said.
Of the 6.48 lakh units unsold in India's top seven cities as of December, Puri said 36 percent is attributed to affordable homes — priced below Rs 40 lakh. “It's largely the developers' fault as the demand appetite is still there.” Metro cities—Hyderabad, Kolkata and Pune—have the maximum number of unsold homes, together constituting more than half of the stock, he said.
India's real estate developers have been grappling with a huge inventory pile up since surprise payment defaults at IL&FS Group subsidiaries in 2018 triggered a credit crunch among non-bank lenders, making refinancing difficult. An economic slowdown that followed Prime Minister Narendra Modi's decision to outlaw 86 percent of currency overnight in November 2016 and rollout of a stricter housing law aimed at protecting homebuyers from frauds only aggravated the developers' woes.
Still, few large developers such as Mahindra Group (Happinest project), Tata Group (Value Homes), Shapoorji Pallonji Group (Joyville), Runwal Group and Poddar Housing have played the “affordable housing game exceptionally well” in the last six-eight months, Puri said. “The real estate industry is moving towards players who have better corporate governance, financial discipline, good ticket size and focus on their customers.”
Also Read: How Mumbai's Real Estate Developers Are Tiding Over The Slowdown
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