Reality sales in Mumbai lowest of six major cities.Posted on : 19 Mar, 2012
The sales velocity in the city’s property market has slowed down to a level where it is now the lowest of the six major cities across the country. Over the one year leading to December 2011, residential sales in Mumbai have dropped by 28 per cent.
According to the third financial quarter report by the real estate research agency Liases Foras, real estate sales in the Mumbai Metropolitan Region (MMR) have plummeted steadily. The city and its suburbs are now left with a huge inventory of new homes which, at the present rate, will take almost four years to clear. Regardless of the waning demand, prices have continued their spiral upward. Over the same one year period, rates have increased by 26 per cent, taking the weighted average price of a new apartment in MMR to an unaffordable Rs 1.09 crore.
Mumbai’s record is the worst of the six cities that include the National Capital Region-Delhi, Bangalore, Chennai, Hyderabad and Pune. All other regions have maintained more or less steady, if not growing, sales. Mumbai, which at 20 million sq ft of residential sales accounted for the maximum sales in the country in April-June 2009, has today seen the sales dwindling to a mere 8 million sq ft in the last quarter. Even after taking into account the ever-rising homes prices, the value of the stock sold has fallen from Rs 9,945 crore to Rs 5,337 crore over the same period.
The report states that in a market that is already hit hard by the global crisis, heavy interest rates and stringent policies, the delay in project execution especially in Mumbai is an indicator of its speculative nature owing to high investor involvement. “Since June 2009, data shows that prices have doubled in MMR even as sales have halved. The Mumbai market is the most inefficient right now and it has reached its tipping point,” said Pankaj Kapoor, CEO of Liases Foras.
He said due to the recent changes in development control rules, the market is in a state of flux. “Bookings have stopped in many western and central suburbs. In some places, prices continue to rise. In others such as Chembur, which had seen the most appreciation with developers quoting Rs 12,000 per sq ft, rates have now come back to Rs 10,000 per sq ft,” said Kapoor. He added that while the market will witness merely a 10-15 per cent price correction, the rates will hereon remain stable for at least the next two years.
SOURCE: Accommodation Times.