The Hindu Business Line : Real estate market seen cooling off

THE High Court decision today on the sale of five NTC mills in Mumbai could lead to a temporary cooling off of the market in central Mumbai, a diminished FDI appetite for real estate in that locality, and revaluation of costing and valuation of projects already in the pipeline, according to real estate market experts.

On the positive side, this change in the turn of events could force the Government to come up with a master plan for the city since it would now be indirectly in charge of two-thirds of the mill lands available for redevelopment.

The entire process now stands a chance of being settled in a firm and unambiguous manner, they said.

The High Court decision has struck at the very roots of the new amendment to the development control rules (the new change made a higher proportion of land available to the mill owners for development), said Mr Balaji Rao, CEO of TCG Urban Infrastructure Holdings, a real estate investment and development company.

"We see the market cooling off slightly as there would be some element of correction with regards to the earlier high valuation on the back of divestment of mill lands earlier, which drove the market into a slight euphoria," said Mr Arun Goel, CEO of DHFL Venture Capital India Pvt Ltd.

The costing and valuation of projects in the pipeline will also undergo changes, affected the end-customer, he added.

With central Mumbai prices cooling off, suburban prices are likely to rule firm and steady for some time, said Mr Rao, who added that this would be a dampener for real estate funds looking at central Mumbai.

(For example, the sale of Jupiter Mills to India Bulls earlier in the year, had the backing of foreign real estate funds).

But the court's decision will go a long way in forcing the Government to have a relook at creating a master plan for Mumbai rather than deal with it on a piecemeal basis, he said.

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