Is this really the best time to buy property in Mumbai? This is one question that has dogged various prospective buyers for a long period of time. There is a lot of anxiety prevailing around the real estate sector in today’s times. As a result of the otherwise sluggish market and other factors, prices of real estate are steadily softening in most areas of Mumbai. However, buyers are concerned about the pros and cons of investing right now or waiting for a further reduction in prices. Is this really a good time to invest in property in Mumbai?
Mumbai has always been largely unaffected by the trends in the Indian real estate market and a large scale price correction in prices of real estate. Many of us dream about owning an apartment in the commercial and financial capital of India. Mumbai has always held on to its high prices much in the mold of other major cities like London or even New York. This has been a fact in spite of dwindling project launches, a sharp capitulation in overall demand and rundown financing for real estate developers. However, a recent study conducted by Knight Frank, the leading real estate consultants, indicates that prices may be softening in Mumbai.
As per this study, the prices of real estate have been fluctuating in a somewhat narrow range and have largely been going down over the last four quarters. This has been happening with the adjustment of the market to newer launches. Premium micro markets usually witness more volatile pricing as compared to suburban micro markets which are close to the periphery. Prices have gone down by almost 10% across the last three quarters in locations like Mahalaxmi, Parel and Lower Parel. At the same time, the suburbs in Western and Central Mumbai along with areas in Thane and Navi Mumbai have seen overall stability of prices which have even risen with the passage of time.
According to the CEO and MD of Orbit Corp, Pujit Agarwal, the study presents accurate findings to a large extent. However, he feels that the market trends are constantly in a state of flux, varying with regard to the area taken into account. He says that prices across South Mumbai have remained unchanged while price corrections have taken place to the tune of 15-18% which is mindboggling, in areas like Lalbaug and Parel and even close to Wadala. According to Agarwal, prices have been somewhat sluggish in comparison in the suburbs of Mumbai and have risen a little in places like Navi Mumbai. However, places like Dombivili, Thane and Kalyan have witnessed price appreciations to the tune of 10-15% and this is set to continue all throughout the MMR region.
There has also been an appreciation in prices of resale flats or properties that have been completed even though strangely, there is a dip in prices to the tune of 10-15% for buildings that are still under construction as per the Chairman & Country Head at Jones Lang LaSalle India, Anuj Puri. The price drop may not be as visible yet owing to such manifold market variations. However, there are various concessions, such as free stamp duty, rent back, floor charge waiver, subvention policies, waiver in car parking charges and registration concessions that may be behind the overall 10-15% discounts that are being offered by real estate developers according to Knight Frank. Alongside, these discounts have been seen to go up to a whopping 25% when it comes to housing projects that are of a premium and high end nature.
There is a large scale desperation noticed among builders and developers in Mumbai. This is because 1.3 lakh apartments are still unsold out of the 2.9 lakh residential units being constructed in the city. The NCR or the National Capital Region has 26% of unsold inventory as compared to the huge 44% witnessed in the MMR or the Mumbai Metropolitan Region. This is a huge worrying sign for developers. The overall demand on part of customers has come down quite significantly. The period between January and September in 2003, saw the launch of 47, 488 units at an approximate level. This translated into a drop of approximately 46% and 42% when the same period for the years 2010 and 2011 was taken into account respectively. Cancellations are another area which is causing problems for developers. The numbers have gone up in recent times and this again, does not augur well for the Mumbai realty sector at large.
Is this the best time to buy real estate as a result? Experts feel that it would make sense to wait a little more especially if investors are targeting areas like central Mumbai. According to Knight Frank, there should be a more definitive correction of prices to come which should be even more beneficial than the current revisions. Builders have been stuck with unsold inventories and decreasing demand that will lead to greater pressure on the prices. When profits go down and costs of interest rise even further, developers will have to lighten their inventories and offer even lower prices. Alongside, prices have gone down by almost 10% in the central suburbs of Mumbai. However, the overall prices will not be going down owing to limited supply and this might be a dominant trend over the next few years. Alongside, areas like Navi Mumbai which represent particular micro markets might not see price corrections as well. There are many projects which are selling successfully while nearing completion and this is another factor behind the same.
According to Jones Lang LaSalle, real estate developers are also waiting for the results of the elections to determine the final prices. In case of a stable government being formed at the centre, there will be huge euphoria and it might boost demand, thereby leading to prices stabilizing. However, you would do well to wait if you are betting on a weak election result according to Puri. Going by that perspective, it would truly be a good time to snap up a property in Mumbai now!
Mumbai has always been largely unaffected by the trends in the Indian real estate market and a large scale price correction in prices of real estate. Many of us dream about owning an apartment in the commercial and financial capital of India. Mumbai has always held on to its high prices much in the mold of other major cities like London or even New York. This has been a fact in spite of dwindling project launches, a sharp capitulation in overall demand and rundown financing for real estate developers. However, a recent study conducted by Knight Frank, the leading real estate consultants, indicates that prices may be softening in Mumbai.
As per this study, the prices of real estate have been fluctuating in a somewhat narrow range and have largely been going down over the last four quarters. This has been happening with the adjustment of the market to newer launches. Premium micro markets usually witness more volatile pricing as compared to suburban micro markets which are close to the periphery. Prices have gone down by almost 10% across the last three quarters in locations like Mahalaxmi, Parel and Lower Parel. At the same time, the suburbs in Western and Central Mumbai along with areas in Thane and Navi Mumbai have seen overall stability of prices which have even risen with the passage of time.
According to the CEO and MD of Orbit Corp, Pujit Agarwal, the study presents accurate findings to a large extent. However, he feels that the market trends are constantly in a state of flux, varying with regard to the area taken into account. He says that prices across South Mumbai have remained unchanged while price corrections have taken place to the tune of 15-18% which is mindboggling, in areas like Lalbaug and Parel and even close to Wadala. According to Agarwal, prices have been somewhat sluggish in comparison in the suburbs of Mumbai and have risen a little in places like Navi Mumbai. However, places like Dombivili, Thane and Kalyan have witnessed price appreciations to the tune of 10-15% and this is set to continue all throughout the MMR region.
There has also been an appreciation in prices of resale flats or properties that have been completed even though strangely, there is a dip in prices to the tune of 10-15% for buildings that are still under construction as per the Chairman & Country Head at Jones Lang LaSalle India, Anuj Puri. The price drop may not be as visible yet owing to such manifold market variations. However, there are various concessions, such as free stamp duty, rent back, floor charge waiver, subvention policies, waiver in car parking charges and registration concessions that may be behind the overall 10-15% discounts that are being offered by real estate developers according to Knight Frank. Alongside, these discounts have been seen to go up to a whopping 25% when it comes to housing projects that are of a premium and high end nature.
There is a large scale desperation noticed among builders and developers in Mumbai. This is because 1.3 lakh apartments are still unsold out of the 2.9 lakh residential units being constructed in the city. The NCR or the National Capital Region has 26% of unsold inventory as compared to the huge 44% witnessed in the MMR or the Mumbai Metropolitan Region. This is a huge worrying sign for developers. The overall demand on part of customers has come down quite significantly. The period between January and September in 2003, saw the launch of 47, 488 units at an approximate level. This translated into a drop of approximately 46% and 42% when the same period for the years 2010 and 2011 was taken into account respectively. Cancellations are another area which is causing problems for developers. The numbers have gone up in recent times and this again, does not augur well for the Mumbai realty sector at large.
Is this the best time to buy real estate as a result? Experts feel that it would make sense to wait a little more especially if investors are targeting areas like central Mumbai. According to Knight Frank, there should be a more definitive correction of prices to come which should be even more beneficial than the current revisions. Builders have been stuck with unsold inventories and decreasing demand that will lead to greater pressure on the prices. When profits go down and costs of interest rise even further, developers will have to lighten their inventories and offer even lower prices. Alongside, prices have gone down by almost 10% in the central suburbs of Mumbai. However, the overall prices will not be going down owing to limited supply and this might be a dominant trend over the next few years. Alongside, areas like Navi Mumbai which represent particular micro markets might not see price corrections as well. There are many projects which are selling successfully while nearing completion and this is another factor behind the same.
According to Jones Lang LaSalle, real estate developers are also waiting for the results of the elections to determine the final prices. In case of a stable government being formed at the centre, there will be huge euphoria and it might boost demand, thereby leading to prices stabilizing. However, you would do well to wait if you are betting on a weak election result according to Puri. Going by that perspective, it would truly be a good time to snap up a property in Mumbai now!
No comments:
Post a Comment