2011 is likely to be a challenging one for realty developers
Mumbai, the country’s financial capital, is expected to lead a fall in property prices owing to buyers’ resistance to higher prices, rising interest rates, tightening of credit to developers and excess supply. The cash flow of realtors that is getting affected by this fall in sales volume and a crunch in the supply of credit following the recent bribery-for-loan scam may force some builders to offload their inventory in the market at negotiated price, experts said.
A fall in the number of transactions that started in October is now likely to be now followed by a cut of around 15% in Mumbai residential prices next year. After a year which has seen sustained momentum in property prices, 2011 is likely to be a challenging one for realty developers. According to experts, Last two months have seen interest in Mumbai and Gurgaon realty markets easing sharply. Next year one can expect 10-15 % fall in realty rates.
Banks are not going to be sympathetic about loans (to developers), IPOs are not a good idea as of now, sales are not taking place,developers will have to offload their inventory at lower prices. In November, the stamp duty and registration offices across Mumbai recorded around 16,000 transactions , which is nearly half of the volume registered a year ago. Most of these registrations are for lease and rent agreements and not for buying and selling property, said an officer at Sub Registrar and Administration office for Mumbai division.
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Yes. I strongly feel the prices will come down. There are so many flats (in thousands) which are lying empty in Mumbai suburbs. Low occupancy causes troubles like poor maintenance of ready buildings. Builders say that they are fully sold out but we are talking about the end users here and not only investors. Investors will not bring occupancy to the building thereby causing poor maintenance. Also a 2 BHK apartment in Goregaon – Borivali now costs more than 1.25 Cr which is far away from a common man`s reach. You can see building in these area in which possessions were given for more than 1-2 years and still the occupancy is as low as 40% or in some cases even lower. Also taking a housing loan to move into your new home has become very expensive and in order to be able to get such loan you should be earning in lakhs/month. Property rates should come down so that the common man can afford it. The sales in these areas for apartments have fallen drastically as I have heard from many Estate Agents and even they have started to fell the heat now. Buyers are willing to come forward provided rates come in their reach without the burden of 70-80% loan on them. Lets take an example of 1200 sq ft. 2 BHK flat in these areas. If you go to buy such a property in building by reputed builders, the rates start from 10K/sq ft Floor Rise Additional parking Stamp Duty and registration charges which end up to more than 1.3 Cr. How will a common man afford it? And if they say that these flats are not for a common man then who are they building numerous townships for? If they expect all foreigners and NRI and Industrialist to come and buy, they would still be able to sell merely 20% of the lot. So think again.. Let the prices come down. Let the sales come back to boom. Earn reasonably and build a happy township!
[...] Property prices are likely to come down in 2011 making it more affordable to own a house, as rising cost of home loans will temper demand. Realty Experts expect some further weakening of house prices during 2011. The correction process has already begun in overpriced locations of Mumbai. The same dynamics will be seen in all cities. [...]