There are construction sites everywhere, especially in the new-age design townships of Noida and Gurgaon, but many are nowhere near completion as cash-strapped developers such as DLF seek to offload assets in an effort to improve cash flow.
It's no secret that many builders are in a bit of a fix, but in spite of this real estate prices are not dropping significantly. According to a report in Money Life, a 1000 ft.² flat in Mumbai costs Rs98 lakh, which equates to more than Rs9,716 per square foot. Areas such as Noida have been hard hit by land scams, resulting in the majority of deals which have taken place over the last year and a half coming under close scrutiny. The supply has increased from 5 million square feet to an incredible 105 million ft.², but nobody is buying, and some experts now expect a sharp correction in prices.
The latest data shows builders in Mumbai have sold just 8.17 million square feet of property from a huge inventory of 116 million square feet. Other cities such as Hyderabad and Pune have had slightly better sales, and after all, Mumbai is one of the costliest places in the country. If property continues to sell at its current rate, Mumbai has an inventory of 40 months as it is currently showing a 22% year-on-year increase, while receipts for money received from sales show a 13% year-on-year decline. Delhi is faring even worse, as even though property in the city is much cheaper than Mumbai the value of real estate being sold is low.
While most of the cities in India are overpriced, Pune is proving to be slightly different as it is one of the least overheated and properties here are relatively reasonably priced, with sales figures being the highest out of the six major cities in India. An average flat costs Rs48lakh. Hyderabad and Chennai are also faring relatively well, and Hyderabad is still seen as being a good investment as flats tend to be larger than average.
In general sales volumes have been poor this year which might lead to expectations of falling property prices. At the moment this isn't happening, but rising unemployment may eventually force the hand of developers seeking higher sales figures.