Home sales in Mumbai slip a tad

“The situation in Greater Mumbai is bad,” says Pankaj Kapoor,founder and managing director,Liases Foras,a Mumbai-based real estate rating and research company. “The slight improvement that has been seen in some months of the year is because sales in extended suburban areas is better. Also,secondary properties are seeing some sales,which is also reflecting in the registration numbers. However,the market is not good,” says Kapoor.

“The drop in sales continues as the Mumbai market does not have right product at the right price,” says Om Ahuja,CEO (residential services),Jones Lang LaSalle India,a real estate consultant. “If there are two-BHK apartments made in Lower Parel,they will sell like hot cakes,but that market has only high-end apartments,for which buyers are difficult to find.”

Developers put the onus for lack of right product in the market on delays in getting approvals for projects. “There have been no approvals for new projects in Mumbai for the last 18 months,which restricted supply of new homes in the market,” says Lalit Kumar Jain,president,CREDAI (Confederation of Real Estate Developer’s Associations of India).

According to a July 4 report of Knight Frank Research,absorption numbers for houses in financial year 2012 in Mumbai are estimated to have dropped by more than 60% from 2007 heyday and 35% from financial year 2011 to an estimated 45,000 units. “The Mumbai market currently has an unsold inventory of 80,000 units,which forms 37% of the total residential supply under construction,” adds the report.

“There is no reduction in property rates and the rate of construction has gone very slow in Mumbai which is taking a toll on sales,” says Kapoor of Liases Foras.

However,realtors defend high prices of residential property. “There could be no correction in prices unless there are measures taken by the Reserve Bank of India,like announcing interest rate cuts,” says Jain of CREDAI. “There has already been a 15% increase in developers’ costs in the last 18 months thanks to new development control rules in Mumbai.

With the cost of construction also rising,developers’ costs in projects have gone up by 25%,” he says.

“As approvals take time,developers get saddled with interest that they have to pay for the land parcels. This adds to the cost. Rates for land is itself high,” says Paras Gundecha,president,MCHI (Maharashtra Chamber of Housing Industry). “The prices will drop if more projects start to come in. Since approval process is getting better than last year,situation should improve.”