The total unsold inventory in Delhi-NCR at 2014-end stood at approximately 1.9 lakh units. The January to March quarter of the current year has seen a 50 per cent decline in new residential project launches across the country compared to the same quarter last year.
pThe quarter saw a total of 25 thousands apartments being launched which is the lowest in the last two years. In order to clear the inventory, it would take developers more than three years. Due to inventory pile up, it is a buyer’s market. There is pressure on developers to clear their inventory to maintain their cash flows. Hence, buyers have a better opportunity to strike a good deal. Developers are willing to negotiate on prices and are also offering freebies to attract buyers. New innovative schemes and carnivals are being launched so that buyers can avail the opportunity.
The sales velocity has not been able to cope up with the huge supply, hence there has been an inventory pile up. As far as investors are concerned, their focus has deviated in the short run to stock market for better returns. However, it is a temporary phase and they will return to realty market in the long run. With regards to end-users, they are primarily looking for ready to move or near completion properties. Hence, there are less takers for under-construction properties which is higher in number and is leading to stock piling.
Developers should focus on selling inventory which is completed or is near completion as the buyers are primarily end-users in the current market who will be least interested in new launches. Due to high supply and low demand, buyers are looking for opportunities and offers which gives them good discount. Hence, new schemes, carnivals and offers need to be launched by developers which will prompt buyers to avail these offers and strike the best bargain. However, the conversion to lead ratio will be lower in the existing market.
Developers should focus on completion of existing projects as it will ensure timely exit for developers as well as their investors. Hence, it is advisable not to divert funds elsewhere. As a number of projects are stalled, buyers are focusing more on projects which are completed or are near completion. Therefore, concentration on existing projects is a viable solution.
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