Friday, May 09, 2008

Mumbai Property Prices Slump Some More

The Tsunami has started. Prices have fallen 15-20% from Lower Parel to Santa Cruz. In suburbs like Jogeshwari, Kandivili and Borivili, rates are down 15-20%. In far-flung areas, it is 30%.

Punit Aggarwal, chairman of Orbit Corp, says quite clearly: "I can state quite firmly that not only are we seeing a slowdown in sales but also a reduction in flat prices."

Although some new TV channels, like News X, desperate for advertising money, shows juvenile reporters saying that Mumbai's real estate boom is going to last longer than expected, it looks that along with the cooling of the stock market, the real estate hype has gone in to refraction.

Brokers in areas like Goregaon and Andheri say that Oberoi Constructions and Nitesh Estates have lowered their prices. In Andheri, Oberoi has dropped rates Rs 750, to Rs 8,500 per square feet, and Nitesh has lowered it Rs 1,500. Rates here had topped out at Rs 8,500-9,500 per square feet.

"The market is not buoyant any more," says chief of Jones Lang La Salle Meghraj, Anuj Puri. Builders had hope to hold on to their properties but have realized that prices are not going up any much more, and hence have started releasing them in to the market. The cracks have been seen higher in small developers, who are happy to cut by even 25%.

Anshuman Magazine, chairman and managing director (South Asia), of CB Richard Ellis, said the next 4 months, prices are expected to drop even more.

So, the advise to speculators in the middle-class segment: Leave this game to the big guys. Interest rates have just one way to go and that is "Up". So, if you are looking to buy up for investment, try other avenues. There is a lot more blood to be spilt in this market before it can look up again.



Refer to the DNA story here

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1 Comment:

suren said...

Residential property prices in Mumbai will see a huge correction by end of 2008 and thereafter to continue receding.Inflation rate to touch 8 to 8.5%,bank loan rates expected to climb to 14% and petrol prices at 60Rs./litr, making real home users as well as investors hard time. Proprty developers fear prices will nose dive, hence stopped may projects.

Scarcity of water and power yet to show effects especially in the areas with huge malls and sky scrapers.

KM

ADBRITE REF

IN PASSING

Consider how the crisis has unfolded over the past eighteen months. The proximate cause is to be found in the housing bubble or more exactly in the excesses of the subprime mortgage market. The longer a double-digit rise in house prices lasted, the more lax the lending practices became. In the end, people could borrow 100 percent of inflated house prices with no money down. Insiders referred to subprime loans as ninja loans—no income, no job, no questions asked. - George Soros in latest book


“When
everything’s going up, there’s a feelgood factor and people tell each other how much their houses are going up at dinner parties,” says Professor Mark Stephens of York University’s Centre for Housing Policy. “Then the music stops, as it always does.”

“Last
year, Japan was a more attractive market to put money in. If you look at the US, we can now get an internal rate of return of 25% there, so why would anyone want to come to India?” - a senior executive at an international financial services group, who did not wish to be named.

"Most
people told us house prices never go down on a national level, and that there had never been a default of an investment-grade-rated mortgage bond, "Mortgage experts were too caught up." - John Paulson, trader, who bet against subprime market and made $15 billion.

The
most puzzling are the real-estate projects of Parsvnath. Just have a look at the Pride Asia project near Chandigarh. They are asking almost US $300K-$350 K dollars for 2 bed room apartments. They have Villas in this project that costs more than US $1.5 million dollars. It is true that some people in India have that kind of money in India. However most of their wealth is black money and that can not be used to buy these properties. Obviously, these projects have been launched keeping NRIs in mind. - Sanjeev, comment from another site

Prachi
Desai, aka Bani, the star of Balalji Telefilms's soap, Kasam Se, has been house hunting for over a year. She had almost closed a 2-BHK deal last year for Rs 1.5 crore in a Oberoi Constructions' building located at Andheri, Mumbai, but when she went back to confirm it, she was asked to cough up Rs 2.61 crore. Since then, she is still house hunting. - Mumbai Mirror

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