Mumbai’s new luxury flats face harsh realty

The drag in luxury home sales may soon leave some of south Mumbai’s posh neighbourhoods with a string of almost empty skyscrapers. In Worli and neighbouring Prabhadevi, which host the super-rich in business and Bollywood, more than half of upcoming residential towers are struggling to find buyers. Lower Parel, also in the vicinity, where residential high-rises have mushroomed in the midst of large office complexes, is witnessing a similar fate. Out of the total supply of 7,292 luxury apartments in Worli and Prabhadevi, 4,107 remain unsold, according to data compiled by LiasesForas Real Estate Rating and Research Pvt. Ltd. The average cost of an apartment in these areas is ?10 crore. At the current pace, it may take more than 17 years to dispose of the current stock, shows the data. “Only a little over 200 units get sold each year in both these areas. We are seeing over 200 months’ supply. This is way too high for any market to sustain,” said Pankaj Kapoor, founder and managing director, LiasesForas. The situation has put pressure on property prices in these areas, with builders offering discounts. At Worli, homes are being sold at ?60,987 per sq. ft (on carpet area basis), down from ?67,467 per sq. ft in the second quarter of 2014-15. At Lower Parel, with 1,337 unsold units, prices have dropped from ?60,708 to ?58,269 per sq. ft during the same period, according to LiasesForas data. “Too much supply came at the same time. If the supply was staggered over a period of time, it would have adjusted to the demand but the challenge compounded as most of them came around the same period,” said Anuj Puri, chairman, Anarock Property Consultants Ltd, a property broking firm.   In Worli alone, 2,290 units launched since 2013 remain unsold, shows another set of data compiled by Anarock. Worli is dotted with some of the most expensive upcoming housing projects: Oberoi Realty Ltd’s uber luxury project Three Sixty West, K Raheja Corp’s Artesia, Omkar Realtors’ 1973 and Provenance Land’s Four Seasons Private Residences. While Lower Parel houses Lodha Group’s ambitious project World Towers, Prabhadevi has Wadhwa Group’s 25 South, among others. “Sales have definitely been slow. We are now focused on first completing our project. We will open our third tower for sale next year when the market stabilizes,” said Rahul Maroo, CEO of Omkar’s 1973 project. Between 2013 and 2017, Omkar sold over 85% of first two towers that comprised over 320 units, he said. Last year, Piramal Capital and Housing Finance Ltd, which lent to the 1973 project, had to bring in Anarock Property Consultants for pushing sales to expedite the recovery of its money. This year, developer Parinee Group was forced to convert its planned upscale residential project in Worli, funded by non-banking finance group ECL Finance Ltd, into office space, due to huge oversupply in the vicinity. Cash-rich builders have, meanwhile, put up a brave face, claiming there are enough takers for high-end homes. Vikas Oberoi, chairman and managing director, Oberoi Realty, said Worli continues to find traction among wealthy Indians looking to shift their base from different parts of the city. “... Properties at Worli Sea Face are being sold at around ?1.5 lakh per sq. ft. Our project is one lane behind and we are selling at 50% of that price. So I have customers lined up, but we are particular about the right profile,” Oberoi said. Launched two years ago, Oberoi’s Three Sixty West project has registered sales of 56 units out of around 200. Not far away is K Raheja Corp’s Artesia, where around 50 units are yet to be sold out of 100, with each apartment costing ?35 crore and above. “We don’t have a large inventory. We are only creating exclusive apartments and very choosy about the profile. We decide whom we want to sell,” said Om Ahuja, chief operating officer, residential business, K Raheja Corp.