For the real estate sector, inventory is building up everywhere. The National Capital Region holds the highest unsold stock of 208,000 units, followed by the Mumbai Metropolitan Region with 206,000 units as of June this year, according to a recent report by KPMG.
Given the rise in inventory, many are calling 2015 the "worst ever period" for residential real estate since the global financial slowdown in 2007 when prices came crashing down the world over.
If sales don't pick up soon enough, it will take five to six years for the glut to ease in most cities. Faridabad has an inventory overhang of 81 months, Greater Noida of 69 months and Ghaziabad of 62 months. Other regions fare no better, though smaller cities are slightly better off than the metros.
With the market standing still, developers are increasingly looking at joint venture partnerships for new projects or selling assets to ease their cash crunch, says Sunil Rohokale, managing director & CEO at ASK Investment Holdings.
Sanjay Chhabria-led Radius Developers, for instance, signed a joint venture with Hubtown last year to develop a premium housing project in Hughes Road in South Mumbai. For Mumbai-based Hubtown, the partnership has come as a big relief, given that it was struggling to service its debt obligations. Hubtown defaulted on repayment of interest and principal on Rs 100 crore of non-convertible debentures in 2013.
Radius Developers has also signed a joint venture with DB Realty to redevelop a five-acre MIG housing colony in Mumbai's Bandra area. The project had been languishing for years.
"When projects get inordinately delayed, developers run out of cash. Then they are left with no option but to dilute equity in projects," says Balaji Raghavan, head (real estate practice), IIFL. Raghavan says IIFL has facilitated four to five such transactions over the last one year.
While the property market in Mumbai, says Rohokale, has been marred by affordability issues, in Delhi, the supply far outstrips the demand.
The slowdown has been particularly hard for developers because demand has dried up not just from buyers but also from investors. Investors, who typically account for 50 per cent of the market, have started cashing out as they see no benefit in staying invested in a market where prices are stagnant, says DS Tripathi, chief executive officer, Aadhar Housing Finance. Actual users are waiting for prices to come down, he adds.
Home prices, which doubled between 2009 and 2012, have remained stagnant over the past two years. "In fact, there is a 20 per cent correction in prices in Mumbai," says Tripathi.
"The situation is really bad. Irrespective of how much you spend on advertisement or brokerage charges, buyers are not coming," says Pujit Aggarwal, managing director of Orbit Corporation.
Mumbai-based Orbit Corporation is struggling to stay afloat. After defaulting on loans, it has been now been classified as a non-performing asset by its lenders and they have started to put its projects on the block.
Amit Agarwal, senior analyst, SBI Cap Securities, says defaults are rising in the real estate space, though not all of them come to light because defaults by small private players mostly go unnoticed.
Rating agency ICRA has sounded a word on caution on the sector. "The outlook on the India Real Estate sector for 2015-16 continues to be affected adversely by weak consumer sentiment and low affordability, factors that are expected to keep residential real estate demand under pressure," it says in its review of rating action for the April-September 2015 period.
Further, ICRA adds delays in execution as a result of labour and raw material shortages have hurt the cash inflows of developers since payments by customers are linked to progress in construction.
The downturn, however, is slowly prompting some bargain hunters to look for cheap deals. In October, traditionally the month when home sales see an increase, registrations in Mumbai went up 25 per cent to 6,129 compared to the same period last year, according to a report in the The Indian Express quoting data from the Inspector General of Registrations.
Amit Bhagat, chief executive officer of ASK Property Investment Advisors, says the fall in interest rates and discounts offered by property developers helped boost sales.
While it may still be too early to call the spike in October a revival, developers says they are seeing more interest from buyers now.
"In the last two-three months, enquiries have gone up and closures increased in the last one month," says Niranjan Hiranandani, managing director, Hiranandani Constructions.
Abhijit Lele in Mumbai contributed to this report