Real Estate Prices Slump Toward 2003 Levels

Remember the time when an upmarket property in Malabar Hill Mumbai cost Rs 12,000-17,000 per sq ft. The same situation is likely to come back within a few months according to real estate agents in Mumbai. Prices here had touched between Rs 25,000 to Rs 45,000 per square feet.

New Delhi too is seeing a clear reversal in times. Builders who purchased properties in early 2008 are now wriggling out of deals. In early 2008, a builder had negotiated a Rs 18-crore deal for a 2,925 sq ft house in New Delhi’s upscale Defence Colony area. His objective was to demolish the house sitting on the land and develop apartments, hoping for a return of about 30 percent. However, today he has opted out of the deal losing even the Rs 50 lakh paid he had paid as token money. The same property is now being valued at Rs 9-10 crore.

Developers are dropping prices but the buyers are simply not coming. It is likely that once the panic button is hit, prices could touch rock bottom within months. There are no financiers in the market, and in Delhi, volumes are down 95 percent from peak. New projects launched are 40 percent cheaper than before. NCR regions are also hit. A 11,250 sq ft home in Golf Links, which was purchased for Rs 70 crore, is now available for Rs 50 crore, but there are few takers.

Mumbai's troubled times continue. Sometime ago a deal was made in Usha Kiran Apartments, on Altamount Road, by an executive of a financial broker. Within days of almost finalizing the deal, the executive backed out. Ten months ago, actor Vinod Khanna offered to pay Rs 1.25 lakh per sq ft for a 2,500 sq ft apartment for the ultra-luxury apartments, El Palazzo, located in the Hanging Gardens area of Malabar Hill. Subsequently Khanna backed out, but it was a wise decision.

Current prices in Il Palazzo are around Rs 70,000 to Rs 75,000 per sq ft. Near here, in Pedder Road, rates are around Rs 45,000 per sq ft. A few kilometers away, in Mumbai's CBD, Nariman Point, a London-based Indian national acquired a 3,475 sq ft property at NCPA Apartments, at Rs 97,842 per sq ft, nearly six months ago, but rates there are almost half that now.

In the central Mumbai’s Worli and Lower Parel areas, rates are down to Rs 12,000-18,000 per sq ft, while in Bandra they have fallen by more than a fifth to Rs 15,000-25,000.

Where price drops have been of the order of 50 percent, buyers appear to be showing interest. Orbit Corporation is now asking Rs 16,000 per sq ft for its new project in Lower Parel down from Rs 35,000 per sq ft.

In India’s technology capital Bangalore, prices have fallen by up to 25 percent in some area, says a Morgan Stanley report, and DLF, India’s biggest real estate company, cut rates by about 30 percent at its upcoming project.

Brigade Group's The Gateway project, one of the oldest localities in town, is quoting at Rs 5,090 per sq ft against Rs 5,790 per sq ft last year. Second sales are going at Rs 4,700-Rs 4,800 per square ft.

Kolkata too is cooling down on the real estate front. Prices are off their mid-2008 peaks. In areas such as Ballygunge Circular Road, Sunny Park and Queens Park rates, which were Rs 8,500-10,000 per sq ft in January 2008 jumped to Rs 13,000-14,000 in June-July before dropping to Rs 9,000-11,000. Residential properties sold at Rs 12,000-15,000 per sq ft last year, are averaging Rs 9,000-10,000 per sq ft now.

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