City anchor: Despite December cheer, real estate market sluggish

After a slump in the real estate market during most part of last year, December 2012 seems to have seen a substantial recovery in home sales registrations. Though developers claimed that the rise in property registrations are a sign of revival, market watchers claimed the rise was due to marketing gimmicks.

According to data from the Director General of Registrations, December saw 6,193 house registrations as compared to 4,370 in November and 4,115 in October. Total house registrations in 2012, however, remained lower at 58,202 as compared to 58,422 in 2011.

Paras Gundecha, president of MCHI-CREDAI, an umbrella organisation of real estate developers, said, "There has always been a robust demand for property in the city, but people, expecting real estate prices to go down, postpone their decision to buy. Now, with property prices remaining rigid, those who have been sitting on the fence, have finally started buying property."

Various property exhibitions across the city towards the end of the year have also helped attract home buyers, said Gundecha.

A survey in June last year by Knight Frank, a real estate consultancy firm, revealed that Mumbai's real estate market had an unsold inventory of 80,000 units, worth approximately Rs 1,05,000 crore.

Though developers feel that the property market is finally looking up, some say it is due to technical reasons coupled with marketing gimmicks. Attractive property schemes and slashing of prices at pre-launch of projects have led to some increase in home sales, say market watchers. Developers such as Lodha Group have priced certain projects 15 to 20 per cent lower than the market rate.

Jayesh Vyas, president of Association of Real Estate Agents (AREA), said, "Some developers, who have taken up multiple projects, are facing a dearth of working capital. They are being forced to sell at lower rates. Yet another reason for the increase is that many home buyers, who may have bought houses earlier, rushed to register their properties before January, which technically sees a rise in stamp duty rates as ready reckoner rates are revised."

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