No shortage of demand; market for builders with good reputation, says HDFC's Deepak Parekh

Deepak Parekh, Chairman of Housing Development Finance Corporation (HDFC), on Friday said that a key lesson that the industry has learnt in the last decade is if a developer has credibility, he will be able to sell units.

"There is no shortage of demand for builders with a good reputation," said Parekh in an interview with CNBC-TV18. "The man on the street is smarter, has become much smarter. He has avenues to find out and he makes enough inquiries," he added.

According to him, the unsold inventory has come down sharply.

"The real estate cycle looks really good. Unsold stock inventory has come down sharply in all categories of homes," he said.

Parekh's comments come at a time when several reports have highlighted that developers in major cities across the country have a massive unsold stock.

Earlier this month, a PropTiger's report said that builders across eight major cities are sitting on an unsold stock of 7,35,852 units as of March 31, 2022, up from 7,05,344 units in March last year.

According to PropTiger, a real estate portal that provides advisory and brokerage services, Delhi-NCR's developers would need more than six years to sell their 1.01 lakh unsold housing stocks. Real estate developers in Bengaluru and Kolkata would need only 31 months, it said.

Inventory overhang -- estimated time period taken by builders to sell off their unsold stock based on the current sales velocity -- has declined to 42 months as against 47 months a year ago mainly due to higher demand for housing, added the report.

"If a developer has not got the credentials or credibility -- his past records have some issues of unfinished (projects) or he has not given proper housing or quality (in projects) -- then whatever he does, he will not be able to sell," said Parekh.