Mumbai May Witness Drop in Property Prices

Bangalore: Mumbai may witness fall in property prices in coming few months because of vast number of project launches and some subsequent changes in Development Control Regulations (DCR), say experts. Also they believe that the drop in property prices could be between 10 to 30 percent, which further depends on the building type and location, reports Lalatendu Mishra, Business Today.
However, the changes in Development Control Regulations (DCR) came into effect few months back. But the building proposals were being delayed in the city due to municipal corporation elections, which are over resulting in project clearance to speed-up.
Kejal Mehta, research analyst, Prabhudas Lilladher cited that "A number of projects which were stuck at the approval stage last year are likely to be cleared, paving way for a large number of launches hitting the market," as reported by Business Today.

Mehta further added that "At a time when launches during the festive season received a tepid response as affordability issues continue, a large stock of new supply could act as the trigger for the much anticipated price reduction that buyers have been waiting for in the Mumbai realty market."

Sluggish economic condition, high property prices and growing interest rates have compelled large number of prospective home buyers to postpone their home buying decision at present market scenario, which has led to economic uncertainties for developers to complete their existing projects on time.

According to Liases Foras, a real estate research firm, in Mumbai Metropolitan Region (MMR), over 88000 housing units laid unsold, including 25000 units within the city only. Therefore, the upcoming launches would drive down the property prices.

The city has witnessed sales of 4427 apartment in January this year, but compared to the last year, the sales has gone down by 13 percent and 25 percent lower than the figure for January and December respectively.

Jasdeep Walia, analyst, Kotak Institutional Equities stated that "In our view, sales run rate has to improve significantly to enable the companies to reduce debt."

According to the findings of PropEquity, it has been observed that 37 percent of affordable housing projects were delayed in MMR followed by 36 percent delay in mid-end housing projects and 48 percent in luxury housing projects.