Developers Increase Project Prices Despite Low Sales

Bangalore: In Mumbai, developers are increasing the project prices despite a slump in sales volume. While the stamp duty and registration data indicated a slump in apartment sales, developers and investors fail to recognize the real estate market situation and they increase the project prices in lieu of decreasing, reports The Times of India.

Mumbai based property brokers said that over the past three months, developers have increased the residential project prices upto 4 percent to 10 percent, according to property brokers. In a survey of more than 80 projects done by Groffr, a group buying portal, around 21 projects witnessed price rise by 10 percent, six projects have seen a rise by 20 percent, whereas, 31 projects have shown no sign of price rise.

Sandeep Reddy of Groffr stated that “Developers hiked prices by 10 percent between January-March 2012. The hike in the past three months is less steep, but we believe it is against the buyer’s expectation of prices dropping in the city. Builders have pre-launched or soft-launched many projects to somehow raise money to fund construction,” reports TOI.

According to Knight Frank’s data, in the financial year 2012, the apartment sales in Mumbai has witnessed a slump of over 60 percent compared to 35 percent in 2011 and the peak time of 2007. The report also said that during 2011-2012, in Mumbai Metropolitan Region (MMR) nearly 45,000 apartments were sold, of the market average of 80,000 units.

According to real estate consultants, there are two significant reasons why Mumbai home buyers showing slow movement in home buying segment, first of all home buyers are waiting for decline in property prices and secondly, they have a fear of project delays. The consultant further said that “Considering the price range, new project launches in the past 18 months are not attractive, but are high-ended and absolutely unaffordable,” reports TOI.

Residential homes under the price range of 45 lakh to 70 lakh sees 80 percent demand in Mumbai, according to Pankaj Kapoor, managing director at property consulting firm Liasas Foras. However, projects under such price range is only available in distant suburban areas like Panvel, Neral, Dombivli, Badlapur and beyond that stretch, where the proximity from the main city as well as the infrastructure is considered as poor.