Monday, July 14, 2008

Bandra Aparment Rates Sink to Rs 16,000 Per Sq Ft

The hottest real estate area in Mumbai is now facing a cooling real estate prices. After having commanded over Rs 25,000 per sq ft in 2007, apartments in Bandra are being quietly sold for Rs 16,000 and Rs 14,000 per sq ft.

While premium areas, like Pali Hill and Carter Road, which have celebrities living in them, are less affected since they have celebrity value attached to them, the less glamorous areas of Bandra, are facing the onslaught of sinking real estate rates.

In fact, some broker sources are expecting apartment prices to sink to between Rs 13,000 and Rs 14,000 per square feet. Apartments in TDR (transfer of development) buildings have even been sold for Rs 12,500 per sq ft.

A small developer in Juhu, scrounging for cash, has even put on offer apartments at a discount of 35% to current market rates.

Even Mahim, located next to Bandra, used to command between Rs 14,000-Rs 16,000 per sq ft during the height of the real estate mania, which ended early this year. Today apartments are being sold at Rs 12,500 per sq ft on the higher side.

A knowledgeable builder has asked his friends to hold on to any purchases of property until the next year. He said that property prices in Mumbai are slated for another 20% drop once the monsoons are over.

A lot of builders are hoping that the fortunes of the stock markets would turn, and that new buyers would come again in to the property market after the rains, and during the festive seasons of Diwali and Christmas. However, even they are now beginning to see the reality and are exiting in a low-key manner.

A few months ago a developer had purchased an old industrial estate in Lower Parel area. Tenants are still waiting for the builder to come to them with a proposal to vacate the premises. It has been months, but in so far, noone has come forward.

Read the DNA story here




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

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.”

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.

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.

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

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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