By: Ravi Sinha
If you are living as a tenant in Mumbai and seeking to buy a house this year, there seem to be quite a few confusions going around. While some of the reports and projected forecasts may give you a ray of hope, it would rather mislead you and your wait for a cheaper home may actually cost you to pay more in future. While realty consultants’ reports say oversupply in Mumbai will lead to price correction of around 15 per cent, the real estate developers, brokers & agents term it a fancy and wishful thinking. Even the home seekers who have done their home work in the property market are pretty convinced that they are not getting any cheaper house as projected by the reports.
Nearly 70 per cent of the active home seekers in the property market who are watching price pattern in the last 3-5 years completely reject the correction theory. This is the finding of a survey across India, including Mumbai, by Track2Realty, an information platform for the real estate. The survey was conducted among 2000 home buyers & sellers and 250 brokers and agents. A majority of them, 70 per cent of the home seekers are convinced that they will have to shell more money to buy a house in 2011, as compared to the last few years. An equally high number of those, 74 per cent who invested in second house and are planning to sell this year have been assured by the dealers & brokers for higher returns.
Similarly, as many brokers & agents, 90 per cent, believe that even property search sites are biased in their valuation of the property, that is often far away of the ground realities. Three in five, 64 per cent, admit that price correction is a devised mechanism to keep end-users at bay and lure the speculators. More than seven out of 10, 74 per cent, in the business of commission on buying and selling admit that it suits their business to see property changing hands on a regular basis. Most of these brokers and property agents define three reasons for property prices to remain bullish in the year 2011. These are—huge demand & supply gap, ever increasing input cost and most appreciating asset class among the investment instruments.
R Karthik, Chief Marketing Officer of Mumbai based realty firm Lodha Developers agrees there will be a positive trend in the year 2011 and the demand will be led by the real buyers. “One of the facts missed out by most studies is the fact that new launches of real-estate products often act as pressure-relief valves on the overall pricing situation – by ensuring large scale consumption of demand at relatively lower prices, and most of the price increase being spread over a smaller base of under-construction inventory over a period of time,” he says.
Sunil Dahiya, Managing Director of Vigneshwara Developers gets a bit philosophical with Mumbai and describes its heritage in Sensex and Bollywood, which will come to add demand to its realty. With a very optimistic note he asserts that “the band of sensex breaching 30000 is not far and hence a story of 45000-50000 is not anymore “preposterous”. This is raising the demand of high-end ultra luxury housing for the top executives that generate the FIIs’ monetary backbone. This also drives other pastime music from derivatives like Private Equity, Venture capital and Debt instruments. More regular office team is required for hands on approach and hence Office realty in demand. Therefore, a very strong market for both residential and commercial is developing; supply as it remains short.”
Babulal Varma, Managing Director of Omkar Realtors & Developers though anticipates price correction in the later half of the year. However, he is equally optimistic that rising demand and low availability of ready-inventory will make Mumbai the most sought-after property market in 2011. “The space available and costs per sector in the city is different vis-à-vis other metros, and developers with good inventories will definitely profit from this year,” he says.
Atul Modak -Kohinoor city head, on the other hand wonders on the rational behind talks on price correction. “Price is always dependent on demand and supply scenario. With construction cost rising up including raw materials like sand, cement and labour I really wonder whether there will be any major correction. However, in case of some projects where prices being jacked up by builders, we may see prices coming to more realistic level,” he says.
Notwithstanding their beliefs and convictions, the business methodology and plans ahead also suggest that developers are hardly bothered about the possibility of any correction in the city. There are a number of launches in the pipeline in the year 2011 with Omkar planning to launch 6-8 projects in the commercial as well residential segments. Lodha Developers also have a slew of new launches planned this year. The immediate in the current month is a commercial project at Thane and a residential project at Powai. Kohinoor Group is launching a couple of residential and commercial projects. Even Singapore based Real Estate Development, Investment and Advisory firm Netz Realty is launching green townships near Mumbai.
This relatively higher pulse rate of the Mumbai realty is a clear indicator that “all is well” for the sector and there is no immediate chance of any correction in the realty market. Any wish for the price correction in the city is just that—a wish.
