Realty slump impacts luxury home sales across cities

Uncertainty of real estate market has now impacted the luxury housing segment as well. While investors used to drive the demand earlier, the segment is now hinging largely on sales to end users. At the end of 2019, around Rs 1.59 lakh crore worth of luxury housing stocks remained unsold, contributing nearly 34 per cent to the total value of all unsold homes across top residential markets.

“Despite having the lowest share of overall unsold stock in the top seven cities, it remains the worst-performing of all budget categories,” Anarock Property Consultants chairman Anuj Puri said. Unsold luxury stock increased 10 per cent from a year earlier in the top seven cities by the end of 2019.

As per the report of Anarock Research, there were 89,200 units of unsold luxury stock (homes priced Rs 1.5 crore or more) by end of 2019 as against 81,290 units in 2018.

Apart from this, Vista Spaces joint managing director Raghuveer Veeramachaneni said. “Homebuyers have become price sensitive. There has been a reduction in ticket sizes by around 30 per cent to 50 per cent and apartment sizes by 10 per cent.”

The highest increase in stocks was seen in Hyderabad and Pune, by 58 per cent and 56 per cent, respectively. Chennai followed the suit at 33 per cent, with National Capital Region witnessed an increase of 17 per cent.

The Luxury home stocks rose by 6 per cent in Bengaluru and 2 per cent in Mumbai, said the report. Kolkata was the only city that saw a decline in stock by 10 per cent, as builders restricted new supply.

Due to the absence of investors in the segment, luxury developers have severely curtailed the supply pipeline. Talking about the same, CEO of a Bengaluru-based, listed company said “We are focusing on mid-income homes as demand is high in that segment. We do not want to do anymore luxury homes and are only selling unsold stocks.”

In terms of sales growth and investor interest, 2019 was a non-event year for the housing sector. Sentiment remained subdued, sustaining almost solely on end-user activity focused on ready-to-move-in or almost-complete homes.

However, some of the branded developers gained ground and performed exceptionally well on sales and revenue growth.

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