Sale of residential property in Mumbai fell between January and November 2012, but not to the extent witnessed in the same period in 2011, signalling a sharp recovery in buying sentiment. Registration of properties were down a mere 2.6% in the eleven months of the year. In contrast, registrations fell 23% in the eleven months to November in 2011, compared with the previous year.
According to data sourced from the Director General of Registrations, Mumbai, the festive month of November contributed to an upswing in registrations, which went up 7% compared with November 2011. On a month-on-month basis, too, there was a 6% surge in the numbers compared with October.
Last year, high interest rates with the Reserve Bank of India hiking lending rates 13 times during the year, and cautious buyer sentiment expecting a correction in prices of residential units, kept the sales sluggish.
Real estate consultants say that customers who held on to their purchase decisions in 2011 came out in 2012 to finally buy property, which led to an increase in demand. At the same time, lack of liquidity in the system led to some steady pricing. Suburban markets were quick to catch the trend and outperformed prime locations in terms of sales with competitive pricing in 2012.
?The increased demand for residential units came from robust commercial office market activity in south central Mumbai,? said Ramesh Nair, managing director (west), Jones Lang LaSalle India. ?Also, sub-markets like Parel, Wadala, Dadar (east), Sewri, Chembur and Tilak Nagar benefited more from attractive pricing when compared with premium addresses of South Mumbai,? he added.The capital values in some of these markets grew in the range of 9-10% year-on-year during the year.
Also, a couple of new project launches in the suburbs aided in some residential sales. Some of these include a project by Lodha Developers in Parel and Bombay Realty in Dadar, and Omkar and Larsen & Toubro?s project at Boiwada, Sewri. Two projects of Omkar in Malad and Bandra Kurla Complex, a Godrej Properties project in Vikhroli and Chembur were also among those launched this year.
Compared with these suburban markets, residential real estate remained sluggish in prime locations of Colaba, Cuffe Parade, Mumbai Central, Worli, Prabhadevi, Lower Parel, Dadar (west) and Mahalaxmi. Absorption was 10-15% below 2011 levels, although capital values rose in the range of 3-4%, said Nair.
According to a December 2012 report by Knight Frank, a global real estate consultant, Mumbai?s lack of liquidity is expected to keep prices steady. ?Mumbai, whose prime residential market is closely correlated to the economic performance of the country, has seen prices stagnate over the last year. With uncertainty over the strength of the economy and an election on the horizon in 2014, we forecast prices to edge up slightly in 2013.? Knight Frank has forecast an increase of about 5% in prices in Mumbai for 2013.