Mumbai's real estate is in a critical phase with property registration numbers continuing to drop month-on-month with no signs of revival. However, despite the dismal scenario, prices have gone up eight to 10 per cent since April.

A Prabhudas Lilladher report said sales registrations for November, 2011 were down 20 per cent to 4060 year-on-year.

In October, it was 25 per cent down to 4633. On a month-on-month basis, registrations declined by 12 per cent. November registrations are the lowest once again and this time in 31 months.

Silver lining

However, group buying Web sites do paint a brighter picture and the prices listed by them in Groffr.com do look encouraging.

Mr Sandeep Reddy, Co-founder and Director, Groffr, says there is considerable interest in second home buying and that too in the outskirts of the city such as Thane and Panel.

Mr Reddy said most buyers were individual investors who find value in investing in projects of reputed builders. There is no intent to reside in the apartment and it is being bought solely for resale at a later stage when rates appreciate.

Mr Reddy is also getting queries from Non-Resident Indians who want to cash in on the rupee depreciation, which alone offers them 15-18 per cent discount on the quoted rates.

Further, the discounts from 15 to 20 per cent negotiated by the portal bring down the price by between 35 to 38 per cent.

This apart, some developers such as Mantri Realty, which participate in overseas real estate exhibitions, also see significant interest for their properties from NRIs. Mr Sunil Mantri, Chairman, Sunil Mantri Group, said NRI enquiries have improved 50 per cent since the rupee slide against the dollar over the last few months. Last year, enquiries received were 800-1000.

The Lodha Group's recent launch, New Cuffe Parade, appears to have elicited good response with the company stating that it has received over 400 bookings.

With apartments priced upwards of Rs 2 crore, the sale is estimated at Rs 1,000 crore. Mr Abhishek Lodha, Managing Director, said, “We have not seen too many launches of the right product in the recent past and that has clearly reflected in the overwhelming response that we received.”

Mr Anand Gupta of the Builders Association of India said it is sentiment that is working against developers rather than the price, already impacted by high home loan rates.

Not all projects were over-priced and there was value for money products in the market, he felt.

High interest rate

Mr Gupta said the real estate industry alone could not be marked as being under stress as other sectors too were impacted by a high interest rate regime. Importantly, delays from the Brihanmumbai Municipal Corporation and other statutory bodies such as the high-rise committee and the environment department in according clearances, had resulted in postponing launches and curtailed supply.

While property sale registrations were dropping, one should also factor in the inventory today.

Mr Pankaj Kapoor, Managing Director of real estate research firm, Liases Foras, said some correction of about 10-15 per cent was already happening with very little impact as end-user affordability has taken the real hit.

In terms of sales across the Mumbai Metropolitan Region, Mr Kapoor said from December 2007 to December 2008, it was 16.58 million sqft; January 2009 to December 2009 - 60.60 million sqft; January 2010 to December 2010 - 47.84 million sqft and between January 2011 to September 2011- 26.59 sqft. Inventory stood at 120 million sqft and sales in the September quarter was 9 million sqft at a sale value of Rs 6,692 crore, with an average sale price of over Rs 10,000 a sqft.

The weighted average of an apartment in Mumbai region worked to Rs 1.04 crore, while in Chennai it is Rs 48 lakh and Pune - Rs 46 lakh, he said.

For people looking for a significant correction, it may not come by the near term. Expert opinions which over the last 18 months professed price corrections are slowly veering round to stating moderation in prices over an extended period as the ‘affordability' factor has deserted the market. This is despite investors wrapping up whatever comes their way with a sizable discount to the quoted prices.

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