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India’s Residential Real Estate Market Sees Historic Low in Inventory Overhang, Signalling Strong Demand: Proptiger.com Report

 

Mumbai, 30th September 2024: The Indian residential real estate market has hit a historic milestone, with inventory overhang (the estimated time required to sell off unsold stock based on sales velocity) dropping to 22 months in the June quarter, down from 34 months in the corresponding quarter last year. This decline underscores robust demand across the sector. Notably, the inventory overhang varies significantly across regions, with Delhi-NCR recording the highest at 31 months and Kolkata the lowest at 16 months.

In its quarterly report titled Real Insight Residential April-June 2024, the Gurugram-headquartered firm highlighted significant improvements in key regions, with NCR’s Gurugram witnessing a substantial decline in inventory overhang from 72 months in Q2 2023 to 31 months in Q2 2024. Ahmedabad also showed strong performance, reducing its inventory overhang from 33 months to 18 months during the same period, reflecting the healthy demand dynamics in these markets.

Regarding unsold inventory, the report noted that despite a moderation in supply and absorption rates, Indias residential real estate market displayed resilience, achieving a 2% year-on-year decline, bringing the total to over 9.26 lakh units as of June 30. This reduction underscores the markets capacity to adapt to evolving conditions, maintaining overall stability and indicating sustained buyer interest across various regions.

Mr. Vikas Wadhawan, Group CFO -REA India & Business Head, PropTiger.com, said, “The significant reduction in inventory overhang to 22 months from 34 months year-on-year reflects strong and sustained demand in India’s residential real estate market. Cities like Gurugram and Ahmedabad have shown remarkable progress, with NCR – Gurugram overhang dropping from 72 months in Q2 2023 to 31 months in Q2 2024, and Ahmedabad’s from 33 months to 18 months over the same period. This trend, combined with a 2% annual decline in unsold inventory to around 9.26 lakh units, underscores the markets resilience and effective adjustment to evolving conditions. As we approach the festive season, we anticipate this positive momentum will continue to gain strength, further boosting market activity and buyer engagement across the country.”

Inventory Overhang:

Inventory overhang across key Indian cities has shown notable improvement compared to the same period last year. Ahmedabad and Bangalore saw significant reductions, with Ahmedabad’s inventory overhang decreasing from 33 months to 18 months and Bangalore’s from 36 months to 18 months. Delhi-NCR experienced a substantial drop from 72 months to 31 months, while Kolkata achieved a remarkable reduction from 34 months to just 16 months.

 

On a pan-India level, the overall inventory overhang decreased to 22 months from 34 months, reflecting a healthier balance between supply and demand in the residential real estate market.

 

Inventory Overhang (In Months)

 

 

 

City

Q2 24

Q2 23

 

 

 

Ahmedabad

18

33

 

 

 

Bangalore

18

36

 

 

 

Chennai

24

28

 

 

 

Delhi NCR

31

72

 

 

 

Hyderabad

26

39

 

 

 

Kolkata

16

34

 

 

 

Mumbai

26

33

 

 

 

Pune

21

27

 

 

 

Pan India

22

34

 

 

 

 

 

 

 

 

 

 

 

Unsold Inventory:

Ahmedabad led the way in reduction in unsold inventory with the highest reduction, cutting over 12,500 units, followed by the NCR region, which saw a decrease of over 9,400 units. These reductions reflect healthy demand and a positive market outlook in these key cities, indicating that the market is effectively absorbing the available stock.

The Mumbai Metropolitan Region (MMR) and Pune — the two most important real estate markets in Maharashtra — accounted for 54 per cent of the total unsold inventory across top 8 cities at the end of the latest June quarter. The MMR and Pune markets have comparatively high unsold stock because of an increase in the number of new launches by developers as a response to strong consumer demand. In MMR, the unsold housing stock rose 1 per cent to 3,39,362 units in April-June 2024 from 3,35,476 units in the corresponding period of the previous year.

 

 

 

 

 

 

 

 

 

Inventory in Units as on 30th June

 

City

Q2 24

Q2 23

YoY Change

 

Ahmedabad

70,229

82,892

-15%

 

Bangalore

81,153

85,279

-5%

 

Chennai

33,204

33,721

-2%

 

Delhi NCR

91,299

1,00,702

-9%

 

Hyderabad

1,32,178

1,25,070

6%

 

Kolkata

21,098

25,179

-16%

 

Mumbai

3,39,362

3,35,476

1%

 

Pune

1,57,555

1,56,672

1%

 

Total

9,26,078

9,44,991

-2%

 

 

NOTE:

Housing markets covered in the report are Ahmedabad, Bengaluru, Chennai, Hyderabad, Kolkata, Delhi-NCR (Gurugram, Noida, Greater Noida, Ghaziabad and Faridabad), MMR (Mumbai, Navi Mumbai & Thane) and Pune.

Inventory overhang refers to – The time, in months, required to sell the inventory at the current monthly sales velocity

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