File Photo: Property construction in Gurgaon

A survey of 120 developers in Delhi and National Capital Region - comprising suburbs such as Noida and Gurgaon - has revealed some scary facts about one of the most sought after residential property markets in the country.1) Demand for properties in Delhi-NCR region has fallen by 30-35 per cent over the last year, which has led to a sharp rise in inventories.2) There are no takers for 1.70 lakh flats in key markets of Delhi, Noida and Gurgaon.3) Rising inventory of unsold flats has led to price correction. The ticket price of 3-bedroom, 2-bedroom and single-room flats has corrected by 30 per cent in Noida, 25 per cent in Gurgaon and 15 per cent in some key areas of Delhi.4) The lack of buyers for existing flats will delay the handover of 90,000 flats currently under construction.5) New launches have dropped by 30-35 per cent because property developers are hard-pressed for cash.

The survey, carried out by industry body Assocham, has also found that unsold inventory pressure in the NCR region is the highest among all other cities in the country.



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"The sentiment in the housing market is really at a low key. Even though there are signs of macroeconomic improvement. It would be a quite a lag before it gets reflected on the real estate markets," said DS Rawat, secretary general of Assocham.



Nearly 60 per cent of unsold flats in Delhi-NCR region are in areas that do not have proper infrastructure, the survey found. Delays in regulatory clearances and litigations have held up the sale of flats in many areas, the survey noted.





Analysts also blame high interest rates for the slump in property sales. Base rates (minimum lending rates) of banks continue to hover around the double digit mark despite three rate cuts this year. Slower-than-expected recovery in the economy is also weighing on property sales, analysts say.What's more, property prices in India continue to be high despite the recent correction, analysts say.Samir Arora of Helios Capital told NDTV that he finds Indian property prices to be " obnoxious ". He expects the realty sector to underperform in the stock markets.It is not surprising that Delhi-NCR-focused realty players such as DLF, Unitech and Jaiprakash Associates are already among the laggards in the stock markets. The fact that these companies are struggling under huge debt has not helped matters, analysts say."One of the issues afflicting the sentiment is the high level of debt with the real estate developers and their poor valuations in the stock markets, limiting their avenues for repair of the balance sheets," Mr Rawat said.Assocham's survey comes days after property consultant JLL India reported high inventory levels in the Mumbai region ; nearly 77,000 apartments remain unsold in Mumbai, Thane and Navi Mumbai region, JLL said.But there's a crucial difference between Delhi and Mumbai markets. Unlike Delhi-NCR, where property prices have seen some correction, builders have managed to hold on to high prices in the Mumbai market, analysts say.