Falling Demand for Mid-Priced Flats in Mumbai

[vinod]

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Mumbai’s market for medium price segment flats seems to have started slipping. The prices of flat in the price band of Rs 40 lakh to Rs 90 lakh, is tapering off in the major suburbs and a decline of around 25-30 % has been noticed in the last two to three months.

Increasing prices in some locations, investors’ growing appetite to buy properties in fast flourishing cities like Pune, Nasik, Thane, and release of stringent credit norms by banks are some of the major reasons responsible for sinking demand for mid segment flats, says real estate connoisseurs.

However, a sudden decline in the primary segment to the medium segment has created a strange atmosphere. This has affected Mumbai real estate a lot and affordability of potential buyers is coming down; whereas, most people are waiting for the prices to back off a bit before buying, says Sanjay Chaturvedi, executive editor, Accommodation Times, an industry magazine.

Places like Mulund, Borilvali and Miraroad are experiencing a fall in prices too. As per the industry watchers, the demand for medium price segment flats has slowed down in the third quarter of 2006-07 but is likely to look up soon.

Furthermore, NRIs are finding properties in Pune, Nagpur, and Nasik excellent from the investment perspective. Mumbai property market is saturated as prospective investors are taking the way to vibrant places in B and C cities. Also, a hike in interest rates and tightening of bank credit to commercial real estate, by RBI, is also believed to be responsible for the falling demand of property in Mumbai.

Has Mumbai peroperty market really reached to its saturation point?

[John]

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[COLOR="Black"][FONT="Georgia"][SIZE="2"]Dear Vinod your observation is correct.

In my opinion the sudden decline in the prices comes as a result of  the apex court order for opening up mill lands in central Mumbai for development. In contrast to The craziness of prices going up everyday we will see a correction and more stability in the prices. The Supreme Court has left no legal recourse left, but  to follow the 1991 Development Control Rules. All mill land developers has to surrender [B]two-thirds of the total area[/B] for public open  spaces, civic use and low cost housing.

This was supposed to be implemented way back but .....

Mumbai's public lost out on:
This mill land redevelopment issue involves mill owners, workers, real estate developers and the government, and the larger public that has lost out the most. The public should have got 160 acres of open space; instead they got 35 acres. 160 acres of land should've gone for low cost housing; that's come down to 25 acres. Mumbai has the lowest ratio of open spaces to population in the world; it's 0.003 acres per population of 1,000; even Delhi has more.

As far as residential stock is concerned, only Bombay Dyeing's Spring Mills at Naigaum and Apollo Mills at Saat Rasta have planned residential complexes. The owners of other big mills like Mumbai Textiles, Jupiter, Kohinoor and Elphinstone have all planned commercial developments. 

Hence, commercial and rental values are expected to come down by 10-12% in the next four months in this belt. According to the experts, an additional 12.5 million sq ft of incremental real estate in central Mumbai would come into the market. This would translate into about [B]Rs 10,000 crore worth of real estate market stock !!! [/B]  :eek: 

Whether the real estate market can sustain this bull run will have to be seen. But as the supply increases, prices will stabilise. Elsewhere in the city, there will be an overall impact.

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Mumbai's public lost out on...

Dear Vinod your observation is correct.

In my opinion the sudden decline in the prices comes as a result of the apex court order for opening up mill lands in central Mumbai for development. In contrast to The craziness of prices going up everyday we will see a correction and more stability in the prices. The Supreme Court has left no legal recourse left, but to follow the 1991 Development Control Rules. All mill land developers has to surrender two-thirds of the total area for public open spaces, civic use and low cost housing.

This was supposed to be implemented way back but .....

Mumbai's public lost out on:
This mill land redevelopment issue involves mill owners, workers, real estate developers and the government, and the larger public that has lost out the most. The public should have got 160 acres of open space; instead they got 35 acres. 160 acres of land should've gone for low cost housing; that's come down to 25 acres. Mumbai has the lowest ratio of open spaces to population in the world; it's 0.003 acres per population of 1,000; even Delhi has more.

As far as residential stock is concerned, only Bombay Dyeing's Spring Mills at Naigaum and Apollo Mills at Saat Rasta have planned residential complexes. The owners of other big mills like Mumbai Textiles, Jupiter, Kohinoor and Elphinstone have all planned commercial developments.

Hence, commercial and rental values are expected to come down by 10-12% in the next four months in this belt. According to the experts, an additional 12.5 million sq ft of incremental real estate in central Mumbai would come into the market. This would translate into about Rs 10,000 crore worth of real estate market stock !!!

Whether the real estate market can sustain this bull run will have to be seen. But as the supply increases, prices will stabilise. Elsewhere in the city, there will be an overall impact.