Property prices in Mumbai to fall by up to 15%

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Mumbai, June 13:: Property prices in Mumbai is likely to fall by 10-15 per cent over the next six to nine months on the back of lacklusture sales.

Leading real estate sector players attribute the impending fall to rise in interest rates, escalation of cost, credit squeeze by banks, bearish capital market and weak sentiments globally leading to poor offtake of properties.

"These will definitely have a negative impact on the property prices in Mumbai and other cities in the country. In my view, the price will go down by 10-15 per cent over the next six to nine months," Indiareit Fund Advisors' Managing Director and Chief Executive officer Ramesh Jogani said.

On the positive side, it shows that markets are maturing and the fall in price will again bring resurgence in customer demand, he added.

Indiareit Fund Advisors manages a total of USD 450 million domestic and offshore funds.

His views were echoed by leading real estate firm Orbit Corporation's Managing Director Pujit Agarwal as he said that there is a total slowdown in the property market at the moment.

"For the last six months sales were lacklusture. The demand for property will not go up until general election scheduled for next year," Agarwal said.

High inflation, increase in cost of capital and widening trade deficit have led to the fall in the stock market, he said adding that real estate market of Mumbai has a significant co-relation with the stock market.

"The wealth, which had been created during the bull run of the market has got diluted. This has led to cash crunch among the developers who are now fighting to complete their project," Agarwal said.

International real estate consultancy firm C B Richard Ellis said increasing lending rates, high inflation and unrealistic property value in Mumbai have led to the fall in prices since the last quarter.

"People are also prefering now to wait and watch before taking any decision on buying properties. Oversupply is also there. In my view, prices will fall by 15-20 per cent in a year or two from now," Rajesh Prasad, Head, Transaction Management Group, CB Richard Ellis (India) said.