Track2Realty Exclusive: To say that the home buyers are coming back to the Mumbai market during the festival season would be stating the obvious. The sentiments driven real estate purchase is already visible with the reported marginal price appreciation of residential real estate across the city. The reports of price appreciation do not just reflect the price trend of the city property market; it does indicate a much larger picture where the recovery of economy and sentiments are all driving the market simultaneously.
It is hence expected that the festive season would be the real turnaround time for Mumbai real estate and the transaction would be much higher than the last few years when the macro-economic outlook was bearish and the overall sentiments played the dampener for the property market in general and the housing market in particular.
The macro-economic outlook has now changed for the better in the last one quarter and what it has actually done is that it has changed the buyers’ psyche vis-à-vis their investment in general and property market in particular. It is hence no surprise to the market watchers that the buyers are anticipating triple comfort – job security, low interest and inflation in control – that could make their home purchase easier.
They have been watching the property market on the sidelines for long and feel that the time has come to invest as the market is evenly balanced for both the developers as well as the buyers now. It may not be the same in time to come once the actual change in the economic outlook is on ground with statistics.
Rakesh Sehgal, a mechanical engineer in Mumbai has zeroed in on a property in Thane. Though festive spirit is on the back of his mind, on a rational level too he feels this is probably the best time in the last 3-4 years and the market is poised to see property prices appreciate in the next two to three quarters when the growth of GDP figure will be released. As of now, the marginal price appreciation in the market is based on that optimism.
“In terms of demand and supply cycle Mumbai property market will always be under-supplied and hence price appreciation is a logical conclusion. But what forced the developers to hold the prices for long is the bearish buyers’ sentiments and that definitely is changing now. Among our peer group we have the feeling of job security now with the recovery in Indian economy, interest rates can here onwards only go downwards and the RBI has already indicated that inflation is on course of downward movement. I feel if I miss the home purchase now I may end up paying more for the same property next year,” says Sehgal.
Rakesh is not alone in Mumbai who believes that the market is best positioned for the average home buyers. It is rather interesting that the marginal price appreciation that should have ideally dampened the spirit of the home buyers has actually revived the sentiments. The home buyers have carried home the point that all the doom and gloom over the property market is over and the marginal appreciation indicates the prices will not correct or crash, as prophets of dooms day forecasted for long. It means not only the value for money now but expected appreciation ahead as well.
Analysts seem to agree with this expected and anticipated triple comfort of the home buyers. Sumit Jain, National Director, Finance & Administration with Colliers International agrees that buyers are indeed back in the market, but it is more a result of buyer optimism rather than any market movement or in terms of pricing and discounts. Buyers have realized that the sentiments in the real estate market are positive, even though the developers did not offer any major freebies or discounts on any projects this year.
“We can attribute this ‘somewhat warm property market’ sentiment to the improved source of fund, some deviation in payment mode, payment term and the overall optimism that is currently prevailing in the market. Beyond sentiment, there are some ground realities too. The year 2014 has so far seen some of the big infrastructure development happening in some parts of Mumbai. The city has also seen an improved public transportation and with good quality roads. Thus, location-specific projects are mostly gaining investors and end users’ attraction. Even though the city will not see a significant change in property prices in the near future, all these factors together suggest that this is the right time to enter the property market,” says Jain.
Hiral Sheth, Director – Marketing with Sheth Creators maintains that with buyers have played the wait and watch game for long. But the residential property sales over the year have been slowly gaining momentum now. With this gain in momentum the prices are expected to bounce strongly in the second half of this financial year. The market is improving; there has been an increase in enquiry levels and footfalls in various projects. The completion of large infrastructure projects will lead to a huge demand of real estate and indirectly assist in elating the property prices,” says Sheth.
The change in sentiments is visible among the buyers across the segment of property. For instance, even the demand for luxury property has also gone up as the developers are innovating with the offers for the customers. A handful of palatial amenities under one roof seem to be the new selling mantra of luxury projects.
The developers also have reasons to feel elated as the buyers are back in the market. Added to it, the new government also promises to ease regulation processes, speeding construction processes and put an end to hurdles in clearances and green stick over the projects. Collectively, it is a celebration time in the city property market for both the buyers as well as the real estate companies.
This raises a fundamental question as to whether it is sheer sentiments or the ground realities too indicate this is right time to enter Mumbai property market. Analysts point out that ground realities are heavily loaded in favour of market recovery and now with the change of sentiments an overall eco system of Mumbai property market has changed.
Hence, this surely is a good time to invest in the Mumbai property market. With the completion of many infrastructural projects and upcoming projects, the city and its remote areas are witnessing a transformation and witnessing a facelift. Also with the festivities around, many developers are proving their customers with many value added services. A few new launches are on the cards and some attractive freebies too will be soon rolled out. The buyers never had as much luxury of choices in the city property market and that is what is driving them to home purchase.
