India’s Luxury Home Inventory Jumps 10% In 2019, Recovery Elusive: Anarock
Unsold stock of luxury homes jumped 10 percent in 2019, says Anarock.
Inventory of luxury homes in India’s top seven cities jumped as a slowing economy worsened the demand for upmarket properties.
The number of unsold luxury units priced above Rs 1.5 crore rose 10 percent year-on-year to 89,200 in 2019, according to a report by Anarock. This stock is worth Rs 1.59 lakh crore, about 34 percent of the total real estate inventory in the seven cities.
Barring Kolkata, the numbers rose in all cities with Hyderabad witnessing the biggest spike. The Mumbai Metropolitan Region led with the highest number of unsold posh homes, followed by Delhi-National Capital Region, Bengaluru, Hyderabad, Pune, Chennai and Kolkata.
Unsold luxury stock jumped even as the category has the lowest share in the total inventory at 14 percent, according to the report tilted ‘Luxury Housing Still In ICU’. Affordable homes contribute the highest 36 percent to the backlog. “Luxury developers have severely curtailed the supply pipeline, primarily due to the absence of investors in this segment.”
India’s residential property developers are struggling as funding dried up from non-banks after the surprise defaults of IL&FS group in September 2018. That aggravated the slowdown that followed Prime Minister Narendra Modi’s decision to outlaw 86 percent of currency overnight in November 2016 and a shortage of working capital caused by a stricter housing law rolled out to protect homebuyers from frauds.
While luxury category has seen the biggest slump, demand for affordable homes hasn’t really recovered.
The unsold stock of affordable homes priced below Rs 40 lakh fell by 1 percent to nearly 2.37 units by 2019-end, according to Anarock. Overall inventory stood at about 6.48 lakh units as of December in the top seven cities across categories, down 4 percent over the previous year.
- The unsold stock of premium homes priced from Rs 80 lakh to Rs 1.5 crore rose by 4 percent to 1.21 lakh units.
- The mid-segment inventory costing Rs 40-80 lakh a unit fell 15 percent, the most among all categories—to approximately 2.02 lakh units.
