Mumbai to witness fall in property prices in coming months, say experts
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Mumbai may witness fall in property prices

A large pipeline of project launches, following changes in Development Control Regulations in Mumbai could trigger a fall in property prices in the coming months.

  • Mumbai,  February 27, 2012  
  • |  
  • UPDATED   09:24 IST

A large pipeline of project launches, following changes in Development Control Regulations (DCR) in Mumbai could trigger a fall in property prices in the coming months, say experts.

Some of them believe the fall could be between 10 and 30 per cent depending on the building category and location. Though the new DCR has come into being a few months ago, building proposals were stalled due to municipal corporation elections in the city. Now that the elections are over and the ruling Shiv Sena-BJP is retaining power, project clearance would be expedited.

"A number of projects which were stuck at the approval stage last year are likely to be cleared, paving way for a large number of launches hitting the market," said Kejal Mehta, research analyst, Prabhudas Lilladher.

"At a time when launches during the festive season received a tepid response as affordability issues continue, a large stock of new supply could act as the trigger for the much anticipated price reduction that buyers have been waiting for in the Mumbai realty market," Mehta added.

High property prices, rising interest rates and economic uncertainties have forced a sizeable number of potential home buyers to defer buying decisions and as a result developers are facing financial crunch to complete the existing projects.

According to the real estate research firm Liases Foras, more than 88,000 housing units in Mumbai Metropolitan Region (MMR) including 25,000 units alone in the city of Mumbai have remained unsold. The new launches would add to the pricing pressure.

In January this year only 4,427 apartment sales were registered which was 13 per cent lower than January last year and 25 per cent below the figure for December, 2011. "In our view, sales run rate has to improve significantly to enable the companies to reduce debt," said Jasdeep Walia, analyst, Kotak Institutional Equities.

PropEquity, a Gurgaon-based real estate research firm has come out with findings that in MMR, 37 per cent of the affordable housing projects were delayed, a 36 per cent delay in the mid-end housing projects and luxury housing at 48 per cent. Considering the problems in buying a house, people prefer to stay on rent and the information from revenue department corroborates it.

Courtesy: Mail Today