Last lockdown, there was an immense pressure for real estate builders to sell off their properties as soon as possible. With a lack of liquidity in the market, they had to sell their high valued inventory at a lower price to avoid defaulting on loan repayments.

Currently the country’s real estate inventory overhang is at 3.7 lakh crore worth of unsold properties in just the top 7 cities. Real estate experts state that it will take 3-4 years for the unsold inventory to liquidate.

This has created an uncertain situation for developers, who face a risk in property value depreciation if they leave the property unsold for a long time and face the risk of incurring losses if they sell the property at a lower price.

Another major way inventory overhang impacts the developers is by leaving them tongue-tied. With unsold property and losses on the sold properties, they are left stuck with that project and moving on to new projects becomes difficult. When they do launch a new project, the previous unsold properties will leave a negative impact on the buyer’s mind.

Moreover, the developers are still liable to pay taxes on their unsold inventory. Such burdens on top of the inventory overhang puts the developers in an unfortunate situation.

Although the situation is grave and challenging for builders and developers, with the government stepping in, they have help at hand. The government has introduced interest subsidies and numerous other such measures to boost home ownership and aid real estate developers.

To improve the overall situation, the government and the builders will have to join hands. With the third wave of the pandemic in sight, the industry must gear itself up to face new challenges.