Up to 60% of luxury apartments, both developed and under construction, remain unsold in Mumbai and experts say it is due to surging prices and regulatory uncertainty.
The Confederation of Real Estate Developers Association of India (CREDAI) has called for urgent reforms, saying there is too much ‘black money’ in the system and corruption.
But it says the government is blocking reforms that the industry actually wants. Reform is needed across the board including property tax, banking and lending, land sales and administration.
The result is that buyers are dwindling. Of the 3,300 luxury apartments being developed in Mumbai it is estimated that between 55 and 60% are yet to be sold. These include flagship developments such as The Imperial at Tardeo in south Mumbai, Orchid Crown at Prabhadevi, and World One at Lower Parel.
The Mumbai market saw about 100 luxury apartments sold in 2011/12 tax year compared with about 400 sold in 2007/08 , the peak of the property market. But an oversupply due to developers rushing to cash in in what was perceived as a property boom is now blighting the market.
‘There’s no doubt that sales in this segment are going slow. Developers are also, therefore, going slow with the construction of these projects. Some developers who have ready apartments are waiting for a better price, but this is more in hope than anything else,’ said Pranay Vakil, chairman of Knight Frank India.
Lalit Kumar Jain, president of CREDAI, has also suggested that special housing zones should be set up. ‘We need clarity on land policy as restricted land use and continued pressure on land availability is pushing up costs for developers,’ he explained.
‘There has been a lot of talk and no action. We hate the system that labels us as crooks but we come up against various bottlenecks at governmental level. The government needs to take the lead on this,’ he added.
