Real estate prices may fall 20-30% in several pockets of Delhi-NCR and Mumbai in six months, but experts are divided on whether and when prices will decline across the board.

A study by HT of the balance sheets of India's top 10 listed developers revealed a massive oversupply and a slowdown in sales: they are sitting on an estimated R31,000 crore worth of unsold properties.

Already, most developers are offering freebies amounting to 58% of the property value. And if you bargain really hard, mid-rung developers are offering discounts of 10-15% on a case-by-case basis.

“But real estate firms are not slashing prices (across the board) as they can still access capital from private equity funds or by restructuring loans,“ said a real estate analyst.

“Companies are going for high margins compared to high volumes. In the long run, this model is not sustainable,“ said Pankaj Kapoor, managing director at real estate consulting firm Liases Foras.

Prices will fall when companies begin to feel the pinch arising from slow sales.

“There is a downward pressure on prices,“ added Ambar Maheshwari, managing director of corporate finance at Jones Lang LaSalle India, a leading property consulting firm. “But it's difficult to say when prices will actually fall.“

Realtors denied a slowdown. “Developers selling properties in prime areas are seeing sales, especially in completed projects.

The sales are not happening in the outskirts and unfinished products,“ said Niranjan Hiranandani, head of the Mumbai-based Hiranandani Group, a leading real estate developer.

But industry experts said that specific exceptions apart, the oversupply is for real.

-HT
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  • Real estate sales fall to 31 month low in November

    Prabhudas Lilladher (PL) India has come out with report on Real estate`s sector. The key highlight of the report is as follows:

    Sales registrations for the month of November 2011 are down 20% YoY to 4,060 levels. On a MoM basis, registrations declined by 12%. Sales registrations have continued to languish at 4,000-4,500 levels for the last few months amid a challenging macro environment. November registrations are the lowest once again and this time in 31 months.

    In terms of monetary policy, RBI has indicated that a reversal in policy is on the cards as soon as the expected drop in inflation materializes over the next few months. Although resumption of easing would be a definite positive for the sector, benefits would come with a lag.

    In the meantime, if the current status quo on pricing is maintained, things could get worse for the sector before getting better. Thus, we believe action on the pricing front by developers is what is needed to revive the sector`s fledgling fortunes.

    In terms of lease transactions, November numbers stood at 8,580, a growth of 58% YoY on a low base of last year. On a MoM basis, leases were up by 6%.

    -Myiris
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  • Big Flats Inventory going to launch in DELHI itself.... Other NCR Cities may effect....

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  • I think most of home/flats buyers afraid and feared of this unavoidable reality. I hoping our country economy will grow up with new year but not sure as current trend not going good, so we should prepared for worst also.

    We need opinion assume this true in next coming year then is this good for end user who want to buy now can wait for such time to come?
    what is impact of such bad time for RE?

    Thanks,
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  • Nice share

    To all prospective home buyers please understand all these factors will result in NO PRICE INCREASE in near future (which is considered depreciation in real estate) but do not expect prices to come down from existing rates.

    Even in good old days (thru 80's and 90's) real estate use to give decent 12-15% CAGR. but never ever the value of RE comes down it stagnates (no price hike for say next 6-12 months but builders will never lower prices.

    So all prospective buyer who are sitting on the sidelines waiting for prices to fall after reading these articles there is trade off involved either you can park your money in bank and earn interest on it for 1 year and then invest at similar rates as are prevalent these days or you can invest and buy your fav property without compromising on location, floor etc.

    As discussed before starting now till next 3-4 months is the best time to shortlist and buy a property as everybody is jittery but once confidence is restored may be with budget or some growth nos in economy( RBI might also lower interest rates).. mark my words these builders will be the 1st ones to hike the rates


    :bab (6):
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  • Forget montly appreciation of your property investments for sometime...

    Originally Posted by saurabh2011



    I am not sure whether flats will be cheaper or not but it is sure that the present trend of price rise of properties in NCR on monthly basis will definitely slows down a lot once these proposed new projects in Delhi starts their construction...
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  • These articles are meaning less....endusers please buy if you have the ability to buy. RE prices hardly come down...plus in 2009 we already had a correction.
    Plus Delhi NCR market is not driven by IT guys like it does in Pune. Different market different dynamics.

    Btw if you look closely papers come out with conflicting atricles...15 days back they will say 'BUY"...after 15 days they say 'SELL'. India has a massive housing shortage. So you do the math.
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  • Apart from RE downside.. pls also note demand : supply ratio & infrastructure availability in specific city..like in Delhi.. there is very less % of supply but RE demand is high so not much impact of any price impact.

    For Noida, there is no land available for any new builder projects after giving 10% developed land to farmers.. and you may get very few new builder projects in coming days…If any RE downtime come in 2012… your project may slightly delay due to funds issue but not much of price impact assuming all projects started in 2011, will be sold off with 70% units. There is no inventory left so which inventory will be impacted…???

    New buyers might not get property in new projects but availability is only in under construction property in re-sale OR RTM. So don’t expect that price will down further from current average rate 3400-3700 (BSP) to more less….at-least in Noida !!

    Another factor is land cost and other construction cost/opex which is obviously will increased in 2012. Land cost… due to farmers/political issue etc… so not much impact in Delhi/Noida/Ghaziabad…. G.Noida/RNE may impact more than Noida/Delhi and builders have pressure to sell inventory.
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  • Originally Posted by Ram.bharose
    To all prospective home buyers please understand all these factors will result in NO PRICE INCREASE in near future (which is considered depreciation in real estate) but do not expect prices to come down from existing rates.

    Even in good old days (thru 80's and 90's) real estate use to give decent 12-15% CAGR. but never ever the value of RE comes down it stagnates (no price hike for say next 6-12 months but builders will never lower prices.

    So all prospective buyer who are sitting on the sidelines waiting for prices to fall after reading these articles there is trade off involved either you can park your money in bank and earn interest on it for 1 year and then invest at similar rates as are prevalent these days or you can invest and buy your fav property without compromising on location, floor etc.

    As discussed before starting now till next 3-4 months is the best time to shortlist and buy a property as everybody is jittery but once confidence is restored may be with budget or some growth nos in economy( RBI might also lower interest rates).. mark my words these builders will be the 1st ones to hike the rates


    :bab (6):



    Ram bharose bhai,

    I had a flat in mumbai bought in 1993 in good area, from 1995 to 2003 asking price of buyers keeps on reducing ,couple of my friends even sold at 20-25% loss in 2001, from 2004 onwards again price increased for my flat till 2008-2009, and i guess that in 2008 prices have given me 10-12% inflation adjusted returns seen from 1993.
    So u see that market changes very fast for a BUYER or a SELLER.
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  • Originally Posted by fritolay_ps
    Apart from RE downside.. pls also note demand : supply ratio & infrastructure availability in specific city..like in Delhi.. there is very less % of supply but RE demand is high so not much impact of any price impact.

    For Noida, there is no land available for any new builder projects after giving 10% developed land to farmers.. and you may get very few new builder projects in coming days…If any RE downtime come in 2012… your project may slightly delay due to funds issue but not much of price impact assuming all projects started in 2011, will be sold off with 70% units. There is no inventory left so which inventory will be impacted…???

    New buyers might not get property in new projects but availability is only in under construction property in re-sale OR RTM. So don’t expect that price will down further from current average rate 3400-3700 (BSP) to more less….at-least in Noida !!

    Another factor is land cost and other construction cost/opex which is obviously will increased in 2012. Land cost… due to farmers/political issue etc… so not much impact in Delhi/Noida/Ghaziabad…. G.Noida/RNE may impact more than Noida/Delhi and builders have pressure to sell inventory.


    how abt noida extn .. is any fall expected there?
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  • I find a very disturbing trend these days...pure end users are trying to think like smart investors and giving a shot in timing the market...i think its not a justified move as the chances of prices moving up are high compared to prices going down (in the long term).

    And RE investment is a long term investors...so relax guys...abhi India mein bahut sara untapped sectors hain...and bahut sara sectors is yet to open up...:bab (22):
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  • Originally Posted by vatsalbajpai
    Ram bharose bhai,

    I had a flat in mumbai bought in 1993 in good area, from 1995 to 2003 asking price of buyers keeps on reducing ,couple of my friends even sold at 20-25% loss in 2001, from 2004 onwards again price increased for my flat till 2008-2009, and i guess that in 2008 prices have given me 10-12% inflation adjusted returns seen from 1993.
    So u see that market changes very fast for a BUYER or a SELLER.


    Sir please restrict my comments to DELHI NCR region only.

    I'll try to answer Mumbai story as well.... Mumbai had a very peculiar issue the property prices there are beyond logic because of acute shortage. So now you have a situation where prices keep on increasing to an absurd levels where middle class buyers/investors can't buy it hence the fall. Imagine properties in panvel/dharavi/ fag end of thane commanding a price of 4000+ bsp.... this can't be sustained.

    Even during current crises Mumbai builders were 1st ones to start cutting prices. or as they put it (giving additional discounts)

    Also just check all reports of top employment generating cities in India for the past 5-10 years. Delhi/Bangalore/ Pune/Hybd are top areas for new employment generation followed by Mumbai/Kolkata/Ahmd/ Kerala cities etc.

    This is bound to remain the same for next 5-10 years atleast because of geographical disadvantage of Mumbai being linear in nature and rest of the cities can expand circularly. Mumbai's loss has been Pune and Nagpur's rise.

    All the new RE development in NCR is 25-30 Kms from city center of CP. but from "mumbai downtown( Fort area) thane is some 35...panvel 50 etc so its difficult for builders to justify exorbitant prices for suburbs in Mumbai
    Hope I have tried to answer your query on Mumbai well.:bab (6):
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  • Noida ext…. keep in mind these points.


    NE issue is not yet cleared..NCR board approval may take time for next 1-2 months… and farmers can still move to SC before election…..so this is longggggggg story…also expect delay by 12-18 months in all projects… 70% guys “Invested” and may be 25-30% would be real buyers waiting for new home…

    New inventory will come again even if all NE-mess up is cleared after election…. Only 6-7 sectors in NE are with residential projects… there are approx 14-15 sectors nearby which are still empty… so price may be still… If current price is 2600 and builder will launch new projects with 2400.. so all buyers will move to new project… you can still get RTM inventory in G.Noida if you pay more 20% .

    Those who got inventory 1700-2100psf.. now due to land issue.. builder may not sell less than 2400-2600 so old guys still get some margin and come out from NE mess… new buyers may not get appreciation greater than current FD rate.
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  • Originally Posted by fritolay_ps
    Noida ext…. keep in mind these points.


    NE issue is not yet cleared..NCR board approval may take time for next 1-2 months… and farmers can still move to SC before election…..so this is longggggggg story…also expect delay by 12-18 months in all projects… 70% guys “Invested” and may be 25-30% would be real buyers waiting for new home…

    New inventory will come again even if all NE-mess up is cleared after election…. Only 6-7 sectors in NE are with residential projects… there are approx 14-15 sectors nearby which are still empty… so price may be still… If current price is 2600 and builder will launch new projects with 2400.. so all buyers will move to new project… you can still get RTM inventory in G.Noida if you pay more 20% .

    Those who got inventory 1700-2100psf.. now due to land issue.. builder may not sell less than 2400-2600 so old guys still get some margin and come out from NE mess… new buyers may not get appreciation greater than current FD rate.


    Very WELL Said. You covered every point of RE.
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  • You never lose money in RE if you can hold it for longer time. No one can predict 100% if prices will drop or not. Price can stand still for some time (no one can how long) before they start appreciating again.
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  • Problem seems to me is that every one wants to get xxx returns in very short period of time - doesn't matter end user or investor. RE is and never was a short term thing. I have seen the areas which were barren for years and were sold for meager amount but time changed the price as well as location style and now those areas are considered one of the best and costly localities.
    RE would certainly pay back by its own time doesn't matter Delhi, Noida or Greater Noida.
    People were used to say long back that who will go to jungle area like Noida, Rohini, ghaziabad etc (GN was not a existing name) and now they say that we would be carorepati, agar us time invest kiya hota... same is true for newer regions now like noida ext or GN. Keep eye on market but wait for sufficient period. One near by metro station or a mall can change the price of your investment ;)....
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