Apartments In Your Project Remain Unsold? These Could Be The Reasons
Some of the Indian real estate markets have been facing the challenge of unsold inventory. Even though the markets are a real estate hotspot with many buildings already constructed and many more coming up, the apartments remain unsold.
Some of the most common reasons of unsold apartments in India are bad economy, high inflation rates, low disposable incomes and bad forecast of property price appreciation. Moreover, even the high interest rates prohibit the home buyers to invest in residential property as the EMIs to be paid are higher.
Apart from the common financial reasons, there are other reasons too that lead to unsold inventory in certain projects in India. Here are the reasons:
Premium price, mediocre facilities: At times, builders tend to claim a premium price for a property as they feel the facilities provided are exclusive and best in class. Though many home buyers might disagree and refuse to pay a premium. This happens mostly when the project, which has already been constructed, has a mismatch between what is on paper and what is being delivered. Most buyers also reject flats as the quality of fittings and other accessories used, is low.
Poor construction quality: The quality of construction is the primary reason that most apartments remain unsold in a project, even if it is located in an appreciating market. Most buyers seek apartments for their own use and are not convinced to see a poorly constructed apartment as a future home.
Excess inventory: If there are too many upcoming residential projects in the vicinity, even in a real estate hotspot, might lead more inventory remaining unsold. Under the pressure and competition, the developers also tend to come up with offers to lure home buyers. In such times, even buyers tend to sit on the fence waiting for the next best offer to come their way.
Area development: The builder might have developed his project faster than the development of civic infrastructure and facilities like grocery stores, better roads and other basic needs necessary for the people living in the property. Though there are chances for the civic infrastructure development, the home buyers will not invest in the property unless that happens. This delay leads to unsold inventory.
Building codes: Home buyers avoid properties that do not adhere to the building codes or have certain legal or land disputes for a particular project. Such projects have a possibility of being stalled mid-way. Case in point is Palais Royale in Worli, Mumbai which was stalled in a tiff with the state government.
Vaastu: The last and the most common reason that even well-designed apartments remain unsold, is their inability to stick to Vaastu principles. Most Indians home buyers tend to follow these ancient Indian home design principles to bring good luck and keep the negative energies at bay. In US too, many buildings both residential and commercial prefer to skip the 13th floor for the similar reason.
(Katya Naidu has been working as a business journalist for the last nine years, and has covered beats across banking, pharma, healthcare, telecom, technology, power, infrastructure, shipping and commodities)