Real estate developers fear Mumbai property rates may shoot through the roof soon

Mona Mehta
Posted: Monday, Jan 14, 2008 at 0018 hrs IST
Updated: Monday, Jan 14, 2008 at 0033 hrs IST

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Mumbai, Jan 13: Real estate developers fear 30% to 50% increase in prices as well as demand for property in Mumbai, Pune, Nasik, Chennai and Bangalore, compared with the ongoing steady demand and prices in Delhi and the NCR region from March 2008 onwards. According to industry experts, with Indiabulls (14 lakh sq ft of commercial and retail) and Peninsula II (5 lakh sq ft) properties under construction in Lower Parel in Mumbai, the demand for residential properties is expected to rise by 30% from March 2008. While Indiabulls property is expected to be operational this

year with a parking space for 3,500 cars, the Peninsula II properties will be completed next year.

According to Abhinandan Lodha, director, Lodha Group, "The commercial property rates in Mumbai are expected to rise by about 50% with more premium buildings getting constructed. Besides, India is emerging as a leading hottest destination for premium commercial establishments whereby builders would be setting up huge number of commercial buildings situated in one location."

Property prices has already touched the roof since the past two years when the booking for Ashoka Towers started at Rs 4,000 per sq ft. However, now the prices have shot up by an additional Rs 18,000 per sq ft. As a result, home buyers have started eyeing Pune, Nasik, Chennai for setting up second homes instead of buying a second home in Mumbai for weekends.

This is also because of the requirement of 90 lakh homes in Mumbai, only 30% homes have been built so far. For example, investors have bought many flats in Kharghar, where 70% of the buyers have still not resided.

In Chennai and Bangalore, dual income families have started spending more on EMIs on buying big homes. Although currently Chennai is not considered a very active property destination, with the mixed used development under construction by Hirco (15 mn sq ft), Chennai will also see boost in prices and demand as well. Besides, there is already overbuilding been happening in Bangalore. Hence, the huge demand. On the contrary, NCR region and Delhi has already seen developments of this size.

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Comments

» Bought-off - I suspect the neutrality of the writer of this article!

Posted by Rishabh on 2009-01-29 23:17:54.034437+05:30
Exactly one year after this article was written, the contents

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» misguiding article

Posted by Santosh on 2009-01-23 12:14:02.592913+05:30
I am surprised to see this misguiding article in FE. As you know that there is change from a seller's market to a buyer's market in realty sector. Although, several sellers in the re-sale segment and developers are still in denial, they can not hold for long. Developers who bought land or redevelopment projects at high rates are feeling the heat beyond imagination. About 30 to 40% of sellers and developers have corrected and reduced their prices. However, still Builders can not sale their flats to pay off debt or for other purposes. There is posibility of higher NPAs in realty sector. Some developers are stuck because they bought at peak and borrowed through structured and unstructured finance routes and are feeling the pinch of paying interest, paying back capital borrowed and not being able to sell their property. It is advisable for buyer to wait for one year as unexpected fall is expected to happen in realty market in Mumbai, due to severe crisis.

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» Misguiding article

Posted by sanyal on 2009-01-23 12:00:05.167377+05:30
It is misguiding article and will risk reputation of FE. Market is expecting correction by 40% in next three months.We are witnessing , a change from a seller's market to a buyer's market. Although, several sellers in the re-sale segment and developers are still in denial, it is not possible for them to hold on. Developers who bought land or redevelopment projects at high rates are feeling the heat beyond imagination. About 30 to 40% of sellers and developers have corrected and reduced their prices. A certain percentage of sellers accept the fact that prices have corrected howeever circumstances are as such theat they can not sale as rates are reduced and they can not recover their pre-conceived figures to either pay off debt or for other purposes are rigid on their sale price. Some developers in Bandra, Mumbai stuck because they bought at peak and borrowed through structured and unstructured finance routes and are feeling the pinch of paying interest, paying back capital borrowed and not being able to sell their property. It is now buyers market and if buyers are not willing to enter market. Builders and developers are under heavy pressure to pay off their debts with bank and some of them have already been informed by banks to sale their projects ar face actions. It is advisable for buyers to wait for another six months for realistic realty market

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» Property Rates in Borival, Dahisar(Mumbai)

Posted by Dhiraj on 2008-11-10 12:11:45.805506+05:30
will the Property rates go down to the Original value as it was 1.5 years back. i.e. 20lack - 25 lacks for 2BHK.... due to the present Market Crashes

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» Real Estate price Crash in 2008

Posted by Vinod Jethia on 2008-08-06 13:30:38.39491+05:30
This is a great good news for every would be flat buyer who is lucky yet not booked any flat to hold little more patience as November 2008 is near and you'll see a huge correction in Mumbai Property prices acroos board from Colaba to Thane, navi Mumbai or Virar.This I had predicted six month ago in this same column about 20% fall in prices till August and now more nose diving will occur.I had also predicted inflatio to rise to 12% and home loan interest rates to rise to 15%making builders impossible to sell their exorbitantly and greedily priced flats So Cheer up guys.

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Real estate developers fear Mumbai property rates may shoot through the roof soon

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