Sucheta Dalal :As prices continue to rise Mumbai real-estate sales stagnate
Sucheta Dalal

Click here for FREE MEMBERSHIP to Moneylife Foundation which entitles you to:
• Access to information on investment issues

• Invitations to attend free workshops on financial literacy
• Grievance redressal


You are here: Home » What's New » As prices continue to rise, Mumbai real-estate sales stagnate
                       Previous           Next

As prices continue to rise, Mumbai real-estate sales stagnate   

May 7, 2010

Mumbai is expected to report lesser volume of real-estate transactions over the next six months, according to industry experts. The fourth quarter results of the last fiscal are also reflecting the lower sales trend in the realty segment. In fact, we may see a repeat of the scenario witnessed during 2008-2009, when the slowdown had severely impacted the real-estate industry.


If the current trend continues, Mumbai will soon see stagnation in property sales. Prices of various real-estate properties—both residential and commercial—have shot up by 30% in a few pockets of Mumbai over the last quarter.


“Post the recession, the increase is volume that you had seen will subdue, because in certain segments, prices have increased by 30%-40%. We are going to see lower volumes of transactions in the next six months compared to the last six months, if the prices do not come down,” said Pranay Vakil, chairman, Knight Frank (India) Pvt Ltd.


“For the first quarter of this fiscal, prices have gone up further by 15%-20%; we are estimating sales to go down further by 25%-30% ,” said Pankaj Kapoor, founder, Liases Foras.


“We need 20%-25% correction in prices to bring back the momentum in the market,” added Mr Kapoor.


“The prices of properties might not see a rise till September and we expect a slowdown in sales during the next quarter due to rains and holidays. But going forward, by October, we shall see a price rise by 10% as we approach the festival season. Usually during that period, the sales pick-up and demand comes back to the market,” said Mayur Shah, chief sales-business unit, Ackruti City Ltd.


The scenario in New Delhi also looks depressing for homebuyers. “Prices are going northwards. They are likely to increase by 10%-15% in the next six to nine months’ time," Parsvnath Developers chairman Pradeep Jain told the media in New Delhi.


Vijay Wadhwa, promoter of the Wadhwa Group, had told Moneylife earlier, “As the situation improved (after the slowdown), developers slowly increased the prices of properties by 10%-15% to cover their losses. But a few of them spiked up the prices over 25%, due to which they failed to report good sales figures.”


With the current scenario in the real-estate industry, will buyers be priced out of the market? — Pallabika Ganguly

-- Sucheta Dalal