60 Percent of Mumbai's Luxury Apartments Remain Unsold

According to Pranay Vakil, chairman, Knight Frank India, "There's no doubt that sales in this segment are going slow. Developers are also, therefore, going slowly with the construction of these projects. Some developers who have ready apartments are waiting for a better price, but this is more in hope than anything else."

Over the past three years, property prices are toughing sky and this market scenario has been observed mainly in three micro-markets of Mumbai, where developers launched most of their super luxury projects. Since June 2009, the city’s Lower Parel area witnessed growth over 150 percent for property prices.

"For most of the realty projects in the luxury category, around 70 percent of the sale price would be represented by the land cost. And around 50 percent of these ultra-luxury projects are being developed through joint development agreements with land owners. The chances are that the developers in such ventures have not paid for the land and, therefore, it may not be hurting them so much that they have to liquidate the stock," said Vakil.

"Builders are trying to enhance the project attributes by adding an international designer or label, but how will they take care of location and demographics." Another reason for the slump in demand of luxury projects is regulatory uncertainty. He further said that “There appears to be an all-round confusion in the property market... the buyer is confused as despite low volumes, the prices don't seem to be coming down. The lender is confused as the developers are delaying completion of projects beyond acceptable time limits," reports Economic Times.