The Hindu Business Line : Mumbai land prices up on ‘artificial’ scarcity

While many realty players attribute the galloping price line to demand-supply mismatch, some like Mr Anant J. Gupta, Chairman of the Builders Association of India, Mumbai Chapter, say properties with clear titles are hard to come by and government-owned land only guaranteed it.

Mr Gupta says it takes two to three years to begin work after one acquires land, as most projects in the land are redevelopment works. “Apart from the title and complications linked to it, vacating and settling existing tenants throw schedules haywire. Whereas in properties such as MMRDA’s, work can be completed in 24-36 months as the site is vacant and more importantly free of encumbrance,” a leading city-based builder points out.

Mr Gupta said the Urban Land Ceiling Act has locked up large tracts of land and created an “artificial” scarcity (The Maharashtra Assembly at Nagpur is reported to have endorsed the resolution for repeal of the Act today). Scrapping of the Act could throw up a fresh supply of about 30,000 acres across Mumbai and its suburbs. It could bring about some stability in prices and ease pressure on existing pockets, he said. On price sustainability, Mr Anuj Puri, Chairman and Country Head, Jones Lang LaSalle Meghraj, said it was no issue as economy continued to buoyant and the sub-prime crisis had no impact.

Mr Puri said propellants for the price were the skewed demand-supply correlation. Large land reserves were with the Government — MMRDA, railways, port and salt pans — and any release in 24-36 months could bring about an equilibrium in the mismatch. Higher loan rates and restriction on debt have not proven a dampener. Moreover, the world was eyeing India as a first stop destination in realty.

Purchasing power up

Another major factor has been the phenomenal rise in purchasing power. Income levels have soared and large bonuses and incentives have become part of the executives’ pay packets. This is probably endorsed by the sale of Pune-based Marvel Realtors. Last week alone, Marvel sold three Rs 6-crore apartments on the outskirts of the city.

On the residential side, Napeansea Road, Peddar Road and Beach Candy Road continue to make waves with per sq ft rates upwards of Rs 55,000, though a Rs 97,000 a sq ft deal was reported close to Nariman Point a few weeks back. Prices are expected to remain largely stable here, says Mr Ramashrya Yadav, Head-Finance and Strategies, Orbit Corporation.

On the commercial front, earlier highs have been Orbit purchasing about 2.5 acres from Gujarat Ambuja for Rs 331 crore in April and Reliance Industries Rs 1,104.11 crore bid for a 18.5-acre site also at BKC — about Rs 1.5 lakh per sq. m in January 2006.

More Stories on : Real Estate & Construction | Maharashtra

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page