Slowdown Heat Melts Realty Prices in Mumbai

The heat of global financial slow down seems to have melted the real estate prices in the financial capital of the country, as the developers slashed the prices of properties to a record low, reports Commodity Online.

During past few years, the real estate prices had swelled up to the maximum levels in metros and several other cosmopolitan cities. However, according to experts the price rise was artificial and temporary. The boom in the real estate sector caused immediate spurt in the prices of the construction related commodities including cement, steel and ceramics. But with real estate prices cooling off in recent times, the cascading effect was seen in the construction related commodities.

However, in the wake of the general election, the government infused huge funds for infrastructure development projects in the country. This gave some strength to the falling commodity prices, but the government support could not give a hold to the falling realty prices in the metros.

In an exhibition held at Mumbai by Maharashtra Chamber of Housing Industry (MCHI), the developers were offering apartments at 25-35 per cent lower prices than the peak price. More interestingly, few developers were also selling residential apartments at 30 per cent lower than the peak prices which were nearing completion.

In the commercial office space as well, few developers were offering at price points which were 25 per cent lower than the peak prices. There was a consensus that in the last 2 months volumes have improved due to new project launches at competitive prices. However, we believe this could be called a trend reversal (in terms of volumes and not pricing) if such encouraging volumes continue for the next few quarters as well.

However, developers opined that there had been better response than the in October 2008.

Amongst the listed space, DLF, Unitech and HDIL have launched residential projects at competitive prices in the last two months. With loan restructuring for most of the companies now over, investors will focus on the interest servicing capabilities of the companies.

However, leading realty stocks witnessed a steady rise in the stock prices. DLF Ltd and Unitech Ltd gained by over 40 per cent during past one month, while HDIL Ltd surged by whopping 53 per cent from its monthly low of Rs 63.45 during mid-March to Rs. 137.65 recently.

April 15, 2009
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  • Dear friend,

    My doubt is- will these builders complete the new " reduced prices " projects on time? Or will they take their own sweet time under some context or the other and dealy the projects even to the tune of a few years? Such situation could be equivalent to the unreduced earlier peak prices as far as the financial burden put on the buyers are concerned.

    ks2071746
    CommentQuote
  • Originally Posted by ks2071746
    Dear friend,

    My doubt is- will these builders complete the new " reduced prices " projects on time? Or will they take their own sweet time under some context or the other and dealy the projects even to the tune of a few years? Such situation could be equivalent to the unreduced earlier peak prices as far as the financial burden put on the buyers are concerned.

    ks2071746


    Dear Friend,

    There is no qurantee for the on-time completion of the projects even when one pays the premium or pay the highly inflated premium.There are lot of builders who do not want to see the price reduction and hence make lot of roumors . They will question on quality of construction/material used ... and on-time completion etc etc...There is no qurantee for a quality on-time delivery even if someone pays higher than the market price... Basically every builder is trying to make more money from the customers . Even if you or me happened to be a builder , you/I will also do the same .Unless you build your own house ,there is no qurantee on the quality/on-time completion.
    CommentQuote
  • Originally Posted by ks2071746
    Dear friend,

    My doubt is- will these builders complete the new " reduced prices " projects on time? Or will they take their own sweet time under some context or the other and dealy the projects even to the tune of a few years? Such situation could be equivalent to the unreduced earlier peak prices as far as the financial burden put on the buyers are concerned.

    ks2071746


    ks it is always better to buy aptmts in smaller projects or g+1 with max of 20-30 houses. I have not seen a single uncompleted small apt complex
    the small builders are not overleveraged bcoz they are not given bank loans
    only the big builders are given project loans and have overleveraged.if they had no debts to service i assure you they wouldnt have reduced prices.
    small and good builders who cater to few localities are not in the soup and they will withstand a longer period of stagnation(no sales) than DLF ,unitech,HDIL,etc.
    CommentQuote
  • Dear friend,

    I agree. But one will have to be very specific about the small builders. I know of a case wherein one my relatives booked a 2 bed flat 1000 sq. ft about 3.5 yeaes back in Vadapalani and progressively paid Rs. 33 lakhs, the full money for a I floor flat in the G+FF as per approval. But the greedy promoter went in for the second floor also without approval and did not complete many common works like staircase flooring, open area flooring, outside plastering etc. The buyers are putting in additional money to do these works. This builder did do good jobs in their few earlier projects and the buyers went based this. Not only that he left many works incomplete, but also sold the available 3 car sheds to 6 people at varying rates from Rs. 50000 to 125000. The USD was also indicated low at the booking stage at 540 sq. ft. for a 1000 sq. ft. flat in the 4 nos. flats building, which itself was low, and during the registration, the UDS mentioned in the documents was 350 sq. ft. only. Most of the buyers did not bother to see this difference or did not even workout the UDS portion that is due for their individual flats from the over all plot area. Such is the ignorance or can we better call this as "believe what is said" attitude on the part of the new buyers?

    ks2071746
    CommentQuote