Tag Archives: NRI investment in Mumbai

Modest appreciation yet Mumbai property market steady

Posted on by Track2Realty
Track2Realty Exclusive

Bottom Line: Contrary to general perception, NHB Residex shows Mumbai is quite a steady property market.

Mumbai City, Mumbai property market, Indian real estate news, Indian property market, NRI investment in Mumbai, Track2RealtyIf only the statistics show a real picture then the Residex of National Housing Bank (NHB) shows the market might have offered a modest appreciation, yet Mumbai is a steady real estate market.

The NHB data accessed till March 2015 shows how historically (since 2007) this market has not been witness to any sharp fall in terms of the pricing index. This is a huge endorsement keeping in mind the downward cycle of the Indian economy in general and country’s housing market in particular in the said period.

Of course, on a micro look the trend is location specific and while certain locations have outperformed quite a bit there are other locations that have been hit with price correction. But overall estimate of the city property market is steady. In the last four quarters, the real data of the said period might not be available with the Residex, what can be vouchsafed at this point of time is the fact that the trend is more or less the same as it has been till march 2015.

Quick bytes

  • Mumbai market along with Pune more steady than other top cities
  • Modest appreciation at a macro level; each micro market showing different trend
  • Projects coming up near new infrastructure developments witness to sizeable appreciation
  • Appreciation potential more with upcoming locations compared to established markets

Different opinion on price index

Parth Mehta, Managing Director, Paradigm Realty feels concerned when he says that over the last one year Mumbai has witnessed very digressed price trends across the city. He maintains that in certain suburbs prices have gone higher due to lesser availability of under-construction and ready stock, whereas in certain areas the volume of sales has increased where there has been higher supply of inventory but prices have not gone up.

“Mumbai is a very location specific market. Certain premium locations like in South Mumbai areas such as Walkeshwar, Carmichael Road, Worli sea-face and in Suburban areas like Juhu sea-face, Carter Road, Bandstand, prime location of Kandivali & Borivali (W) which are dominated by more of business centric population governed by lesser supply of under-construction and ready goods will indeed have price appreciation,” says Mehta.

Vineet Relia, Managing Director, SARE Homes believes that over the past few years, uncertainty around development plans and government approvals has created stagnancy in the overall real estate market. This has largely affected the two biggest drivers of real estate in India, Delhi and Mumbai. However, some of the recent announcements made by the state and central government have given a thrust to the real estate market of Mumbai. As per the recent reports, all these announcements have improved customer sentiments and impacted sale of properties in the areas surrounding outer Mumbai such as Thane and Navi Mumbai.

“In areas like Navi Mumbai and Thane property sales have increased as compared to last year. However, overall the city is experiencing a steady fall in new launches. According to the Knight Frank report, there was a 23 per cent decline in new launches in H2 2015, compared to H2 2014. During the second half of 2015, sale of housing units dropped by 6 per cent year-on-year and clocked slightly more than 34,000 units,” says Relia.

Price index location specific

An optimistic Kedar Joshi, CMO Ahuja Constructions nevertheless asserts that Mumbai market has shown a steady growth in the last four quarters, especially during the festive occasions there has been a considerable investment from buyers in the real estate market due to attractive offers and schemes. Buyers seeking homes are playing a wait and watch approach for a while, and are looking forward to make investments in the areas that offer good quality infrastructure and effective connectivity to all parts of the city.

“The price trend seen among buyers in Mumbai’s realty market is very location centric. A considerable demand pull is especially seen towards the central suburbs like Sion, Ghatkopar and Chembur which are the latest entrants into the location-centric investment run. A steady and positive movement is seen in the price trend particularly being focused on the upcoming and emerging urban sprawls,” says Joshi.

Sandeep Ahuja, CEO, Richa Realty, on the contrary, feels that in the last few quarters the overall prices have come down and are now stagnated at current levels. The fall in many micro markets in last four quarters has been between 7-18 percent.

I don’t see an upward trend for the next 2-3 quarters. Developers are still sitting on high inventory levels and would like to clear that before raising prices. We expect the absorption levels to improve in next few quarters and post that price appreciation. Markets with intrinsic demand, restricted future supply levels and infrastructure development will see maximum price advantage,” says Ahuja.

Micro markets in demand

This raises a fundamental question as to which are the locations that hold more potential. Experts believe any locality is pre-dominantly governed by the infrastructure, demographics, proximity to main highways, railway stations & schools shall alternately command better appreciation.

Developers are also getting smart to identify the potential and are launching projects near the upcoming infrastructure developments like metros and monorail projects. The upcoming Phase-II of Mumbai Metro involving the stretch of Dahisar-Charkop-Bandra-Mankhurd is one such infrastructure development been looked upon. The project has in particular brought a demand leap in the nearby regions like Oshiwara.

The price trend in Mumbai clearly indicates that infrastructure projects located around Sion, Jogeshwari and Oshiwara seem to be altering the real estate landscape in many ways.

In Central Mumbai locations Ghatkopar, Powai and Vikhroli have already been witness to more than average appreciation due to better connectivity and upcoming commercial parks. Other micro pockets which might see price appreciation include locations near proposed metro corridor on Western Express Highway, Mulund, and Dadar in South – Central Mumbai belt.

The property markets in areas such as Thane, Panvel, Dombivili etc. continue to remain the top investment destinations in Mumbai. With improving connectivity, government’s efforts to push stalled projects and increase in corporate interest in these areas, there is likely to be an uplift in residential market sentiment along with an improvement in social viability of the region.

Also, Bandra continues to be a luxury residential hotspot in Mumbai. The area remains a preferred destination for prime property seekers because of its elite profile more options for shopping and higher recreation facilities; thus attracting price appreciation.

Infrastructure calling card

With the JVLR freeway offering connectivity to areas like Bandra and South Mumbai, Western Suburbs such as Oshiwara are fast developing into a good investment option for people who are seeking to draw out maximum potential out of a property. Projects like the elevated road on Thane- Ghodbunder Road are also expected to change the real estate market dynamics.

The final nod for the International Airport at Panvel and proposed SEZs at Dronagiri, Ulwe and Kalamboli will give impetus to the property market in surrounding areas which are now expected to witness growth. Both these developments will give fillip to commercial and residential market in the adjoining areas. While property rates in main Mumbai are no longer within the reach of those who are looking for homes at affordable price, Navi Mumbai has shown an impressive growth with residential housing which are within the budget.

DP confusion responsible for less launches in Mumbai

Posted on by Track2Realty

The new launches have drastically slowed down in Mumbai due to confusion with Development Plan.

Mumbai City, Mumbai property market, Indian real estate news, Indian property market, NRI investment in Mumbai, Track2RealtyA perception has gained ground that the less launches are due to slow sales, liquidity crunch of the developers and other market realities. Though these reasons cannot be ruled out behind some setbacks, the Mumbai real estate has been in a wait & watch mode for quite some time for another significant reason – confusion with the new DP (Development Plan).

It has, as a matter of fact, affected the new launches in the city more than any other factor. The developers do not wish to launch a project now and within a few months find themselves in a position where they have to rush to the Brihanmumbai Municipal Corporation (BMC) for further changes.

The BMC is expected to release its revised Development Plan by February 2016. Last year, the draft DP led to confusion in the market where both the developers as well as the citizens pointed out glaring errors, leading to the removal of then Municipal Commissioner. There were about 8500 suggestions and objections to the draft DP. The developers also maintain that this led to the delay in many new launches.

Dhaval Ajmera, Director, Ajmera Realty & Infra points out that the confusion that has happened with the proposed DP is the primary reason for the slowing down of the new launches in the past one year in Mumbai. The DP is now being rectified, as there have been confusions, wrong reservations that have been filed. Probably certain places that were early declared as residential area are now been under another reservation where the developer cannot launch the project as it is wrongly demarcated. Hence, until the reservation is cleared, launches have had to take a backseat.

“There are instances where property declared as a completely residential zone is now partly claimed under the reservations. Hence, if the developer has planned a project in a certain area, it is affected due to the partial reservations  impacting the launch of the complete project to go on a hold. This definitely affects the developer majorly keeping in mind that the finances are stuck. Keeping in mind the confusion in the draft development plan, it is taking long to solve and we hope to get it resolved probably by May this year,” says Ajmera.

Parth Mehta, Managing Director, Paradigm Realty maintains that where land has been already acquired or development rights has been already obtained there the developers are left with no choice but to go ahead with prevailing DCR (Development Control Regulations) and commence their construction but provisions for extra FSI can always be kept in planning provisions.

“Where developers who are looking at potential new acquisition currently there is a wait and watch scenario with reference to permissible FSI and new approval policy. Where developer has received complete approval and where construction activity is visible at the site there indeed sales are still happening, may not be at a very high velocity but apartments in projects by credible developers with a delivery track record are selling backed by complete approvals in place, home loans facility tie up with banks and subvention schemes offered by banks and institutions,” says Mehta.

Vipul Shah, Managing Director, Parinee Group, on the contrary, believes that the developers are going ahead with their existing developments plan as the new DP has taken a lot of time. However, because of the delay there is a lot of confusion in the industry. This should have been avoided. So the sooner the new DP is released, it would bring clarity to benefit both the real estate industry and the consumer.

“The old DP and the expected new DP has taken a long time and still not sure, which in turn has created a huge confusion in the Industry resulting in imbalance of the realty eco system. Initially the sales were a bit slow but buyers are waiting to buy the right project as we have seen in case of few new launches proving the market is looking up,” says Shah.

The developers demand that the new DP will indeed have to be released keeping in mind no area specific FSI imbalance. There will have to be a balanced distribution of FSI to ensure optimum supply of new inventory in locations, whereby there will not be very highly skewed pricing imbalance.

This also raises a fundamental question as to what extent slow sales have affected the new launches and to what extent the DP confusion has been the catalyst. Most of the analysts tracking Mumbai property market agree that the liquidity crunch, uncertain job scenario, lack of visible parameters for business growth have kept people on wait & watch mode.

As far as homebuyers are concerned, there is a general belief that the confusion has also affected the home buying decision of prospective buyers as many of them are so well informed that they anticipate significant price correction once new DP is implemented.

Developers nevertheless maintain that the price correction has already been factored in today’s prices backed by eased out payment plans . Hence, prices going below this points will not be a viable proposition for the developers considering high input cost. But the new launches have been definitely affected as the developers are in dilemma whether to wait for new DP or go ahead with current DCR. The developers hence demand that the new DP should be in sync with the government’s loud claims of facilitating ‘ease of doing business’.