Developers slash prices to revive the market, but buyers still apprehensive.
The effects of the global economic slowdown are finally beginning to show in Mumbai’s property market as builders scramble to offer recession housing, and rates.
Nothing works like a discount, and housing in projects of all hues—from Runwal Hills at Chembur, Lok Nirman in Andheri or Vardhaman Heights at Byculla—was being put up for ready possession at discounted rates of up to 20% at the property exhibition organised by the Maharashtra Chamber of Housing Industry (MHCI) last week.
But real estate experts are not impressed. Analysts from Centrum, an investment advisory group, and MF Global Sify Securities Pvt Ltd point out that around 75% of the projects promoted at the exhibition were those being sold during the last year’s MCHI exhibition, indicating little or no off-take in residential volumes in Mumbai during Oct 2008 – March 2009.
“The fact that the developers are cutting rates by up to 20% in these ready flats is not a surprise. It is a sign that the developers are getting realistic about the market scenario,” said an analyst. The experts also believe that the developers are adopting this strategy to placate growing concern among buyers that the cash-strapped developer community would abandon the projects mid-way.
Analysts said that the developers’ eagerness to lift the market was evident from the fact that they were asking buyers to come to their head office for negotiations. “This was not the case until last year when the word ‘negotiation’ was unheard of,” said a senior analyst with a leading foreign bank.
Though the fair received a lot of enquires, buyers felt that property prices were still unaffordable. The analysts said that the projects in the sub-Rs40 lakh bracket (which comprised 29% of all projects at the exhibition) were located in far-flung suburbs, which routinely suffer from power and water supply shortages.
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