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Mumbai’s real estate is said to be hot property.
However, in the last quarter, sales have dipped so
low that builders are getting worried.
Property research firm Liases Foras that surveyed
2,300 projects in the Mumbai Metropolitan Region (MMR)
between October 2010 and December 2010 reports that
less than four million sq feet of new residential
space was sold every month.
A total of only 10.61 million sq feet was sold in
three months. Assuming that the average apartment
size was 1,100 sq feet, it means less than 3,300 houses
were sold per month.
The survey takes into account only new projects and
not re-sale apartments.
“This means that on an average, no project
sold more than five units in the last quarter,”
said Pankaj Kapoor, the firm’s managing director.
He added, “But out of 2,300, only 70-odd projects
have contributed to 70 per cent of the total sales,
which includes some new launches where developers
claimed good initial off-take.
Keep them aside, and the rest may have not even sold
more than one unit, or not sold at all. The markets
cannot go worse than this.”
In the same period in 2009, a total of 13 million
sq feet was sold. Experts say that not only is this
a record low, but what is scarier is the huge inventory
pile-up - the number of newly constructed houses that
are lying unsold - which in MMR is 99 million sq feet
or 88,000 homes.
“At the current pace of consumption, it will
take two years and four months to exhaust this stock.
This is alarming because, a healthy market is supposed
to have only an eight month inventory pile-up,”
Buyers might benefit as the pile-up could build pressure
on developers to reduce prices. Even as developers
try to put up a brave face, a leading builder, requesting
anonymity, admitted that sales have considerably dipped.
“Last year at this time, we were flooded with
calls. However, inquiries have dropped substantially
now. I cannot go against the market trend and reduce
my rate to Rs 7,500 per sq feet in Malad when the
next project is selling at Rs 11,000 per sq feet.
What we have started doing is asking the caller to
meet our representatives and if he/she looks serious,
we negotiate with an open mind,” said the builder,
who has quite a few projects between Goregaon and
Ambar Maheshwari, Head of Investment Advisory, DTZ
(an international property consultancy firm), said,
“Sales are going down primarily because prices
at the current levels are unsustainable.
There will be a certain amount of correction in prices,
but mainly in the form of deals takingplace 10-15
per cent lower than the sticker price. If that is
done, sales will pick up to some extent. But I don’t
see a correction greater than that in the next six
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