Real estate in Mumbai might not see any price correction
In a report by the CRISIL Research, it is reported that there is no scope of reduction of prices for the properties in Mumbai.
Though the sale of properties has reduced by 40 percent, a sharp rise in construction and funding costs, in addition to amendments to the Development Control Regulations (DCR), will increase costs for builders and prevent a reduction in home prices in Mumbai.
The research report has found that the cost of cement in Mumbai may rise by 5 percent, steel price will escalate by 7 to 9 percent and cost of labor will rise by 10 to 15 percent.
Recent amendments in the DCR will increase costs for builders further by 15%, on an average. The modified rules, which came into effect from January 2012, have revised the method of calculating the floor space index (FSI). This will definitely increase the cost of construction of apartments in Mumbai.
Higher interest rates, slower economic growth, inflationary pressure and expectation of price correction led most buyers to defer buying decisions in this financial year.
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Source: Business Standard
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