Why builders won't listen to Deepak Parekh, Piyush Goyal
Real Estate

Why builders won't listen to Deepak Parekh, Piyush Goyal

At a webinar on ‘The Real Estate Challenge’  organised by Construction World, when an audience poll question was put to the over 1,200 attendees as to how many would be interested in buying a residential property in case the prices were reduced by 30 per cent, affirmation was received from 78 per cent of the attendees.

Also read: 67% still want to invest in properties despite COVID 

However, the panellists at the webinar discussion did not want to deliberate over the issue as the reduction of 30 per cent was unthinkable due to the lower margins that everyone has been working upon.

To add more perspective to this, we now know that over 1.2 million houses are part of unsold inventory across 30 cities in India. Of these, the top eight cities, including Mumbai Metropolitan Region, National Capital Region, Bengaluru, Hyderabad, Chennai and Pune alone account for nearly a million houses. This accounts for a four-year inventory meaning you can tend to the real estate demand for the next four years without building a single house, provided the prices are acceptable to the buyers.

In our June 2020 edition, we also wrote about the The Real Estate Pile-Up – Developers sitting on unsold inventory worth Rs 3,700 billion! Watch out for the June edition of CW for this report.

Here is where the rub is. Half of the total unsold inventory is under affordable housing category and yet is lying unsold. This clearly means that there is benefit in keeping inventory unsold than selling it at a lower price.

Union Minister Piyush Goyal and HDFC Chairman Deepak Parekh have urged the developers to sell inventory by reducing prices but they are not seeing what the developers are experiencing. Most of them are indebted and the value of the security has been appraised some time ago when rates were better, based on which loans have been extended to them. If they sell even a portion of their stock at a lower price the lenders will demand more security to cover the loan outstanding. No wonder the advice of the learned fall on deaf ears of the experienced.

At a webinar on ‘The Real Estate Challenge’  organised by Construction World, when an audience poll question was put to the over 1,200 attendees as to how many would be interested in buying a residential property in case the prices were reduced by 30 per cent, affirmation was received from 78 per cent of the attendees. Also read: 67% still want to invest in properties despite COVID  However, the panellists at the webinar discussion did not want to deliberate over the issue as the reduction of 30 per cent was unthinkable due to the lower margins that everyone has been working upon. To add more perspective to this, we now know that over 1.2 million houses are part of unsold inventory across 30 cities in India. Of these, the top eight cities, including Mumbai Metropolitan Region, National Capital Region, Bengaluru, Hyderabad, Chennai and Pune alone account for nearly a million houses. This accounts for a four-year inventory meaning you can tend to the real estate demand for the next four years without building a single house, provided the prices are acceptable to the buyers. In our June 2020 edition, we also wrote about the The Real Estate Pile-Up – Developers sitting on unsold inventory worth Rs 3,700 billion! Watch out for the June edition of CW for this report. Here is where the rub is. Half of the total unsold inventory is under affordable housing category and yet is lying unsold. This clearly means that there is benefit in keeping inventory unsold than selling it at a lower price. Union Minister Piyush Goyal and HDFC Chairman Deepak Parekh have urged the developers to sell inventory by reducing prices but they are not seeing what the developers are experiencing. Most of them are indebted and the value of the security has been appraised some time ago when rates were better, based on which loans have been extended to them. If they sell even a portion of their stock at a lower price the lenders will demand more security to cover the loan outstanding. No wonder the advice of the learned fall on deaf ears of the experienced.

Next Story
Infrastructure Transport

Cabinet Approves Key Highway and Rail Projects in Bihar Region

The Union Cabinet on Wednesday approved the four-laning of the 84.2-km Mokama-Munger section of the Buxar-Bhagalpur high-speed corridor, a key industrial region in poll-bound Bihar. The Cabinet also sanctioned the doubling of the 177-km Bhagalpur-Dumka-Rampurhat railway line, which passes through Bihar, Jharkhand, and West Bengal, at a cost of Rs 31.7 billion.The Rs 44.5 billion highway project will be constructed under the hybrid annuity model, a variant of public-private partnership. The Mokama-Munger stretch was the only remaining two-lane section of the 363-km Buxar-Bhagalpur corridor. Fou..

Next Story
Infrastructure Transport

NGT Issues Notice on Bengaluru Twin Tunnel Project

The National Green Tribunal (NGT) on Wednesday issued notices in response to a petition filed by Bengaluru Praja Vedike and others, challenging the Bengaluru twin tunnel road project. Petitioners claim the project was “hastily announced” and bypassed mandatory environmental impact assessment procedures.Notices have been served to the Karnataka Government, Greater Bengaluru Authority, State Environment Impact Assessment Authority (SEIAA), Bengaluru Smart Infrastructure Ltd (B-SMILE), the Union Ministry of Environment, Forest and Climate Change, and project consultants.The 16.74-km twin-tube..

Next Story
Real Estate

India’s Residential Sales to Dip Slightly in FY26

Residential sales in India’s seven major cities are projected to decline by up to 3 per cent year-on-year in FY26 to 620–640 million square feet (msf), amid a moderation in sales velocity, according to ratings agency Icra.In FY25, sales stood at 643 msf, down 8 per cent YoY, following a sharp contraction in new launches and moderated demand in the affordable and mid-income segments. This slowdown came after the sector posted a robust compound annual growth rate of 26 per cent in area sales between FY22 and FY24.Icra noted: “Having seen a strong upcycle, the sector entered an equilibrium ..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Talk to us?