During the bounce back from the global crisis in 2009, Singapore and Mumbai were the Asian cities that registered maximum appreciation in realty prices — as much as 75%, in just two years. With economies and regulation in regression mode, these cities will be at the forefront of price fall too, said real estate consultant DTZ in a report.
From Beijing and Hong Kong to Singapore and Bangkok, leading Asian cities are witnessing a drop of 15-25% in residential realty rates currently. Leading the slide is the realty market of China, where the authorities are deliberately cooling prices by imposing new taxes on multiple ownership and preventing the build-up of a bubble.
The trend in Mumbai is also consistent with the situation across the continent, with prices heading southwards after strong resistance from the realty fraternity for over a year.
“Residential property prices have taken a beating across Asia Pacific, and Mumbai is no exception. This city is a bellwether for the Indian property market — when conditions turn favourable, real estate prices in Mumbai rise first, and vice-versa,” said Anuj Puri, chairperson and country head, Jones Lang LaSalle India.
Given the high stakes involved, the real estate market is extremely sensitive to political unrest and the current turmoil at the Centre could act as a catalyst, he said.
Mumbai’s residential market has already seen a slowdown over the last three quarters, and even the festival season did not yield the anticipated rise in sales. The downward pressure in rates will continue, aver experts.
“High inflation and interest rates impacts demand for residential segment, particularly in the mid-range and low-end,” said Anshul Jain, CEO, DTZ India, adding that new project launches are also likely to remain restrained amid the depressed market conditions.
Despite the odds, however, some developers remain diffident and don’t see a significant price correction from here.
“On the residential side, there is not much supply coming in due to approval issues. I do not expect any price correction though I do not see much upside either. Prices will remain flat for most part of the year. Once there is abundant supply in certain sub-segments, such as the Dadar to Lalbaug stretch and the outskirts of the city like Dombivli and Thane, we could see some price correction there, but this new supply is highly dependent on permissions,” said Pujit Aggarwal, managing director and CEO, Orbit Corporation.
Bharat Dhuppar, chief marketing officer, OmkarRealty, says the upside will be capped, though. “Business should start picking up in the second half because by then interest rates would be coming down and there is a good amount of pent-up demand that will eventually come in. So prices would remain moderate with a slight upward bias, not a major one,” he said.
Niranjan Hiranandani, managing director of Hiranandani Constructions, concurs, saying price rise will begin after April.
“The first quarter looks tough in terms of sales, as there has not been any correction on the interest rates side. Thus, it is difficult for buyers to come in at this stage. I expect things to improve in the second quarter as by then interest rates would start falling and therefore demand would convert into actual sales. Post April, prices will also witness a slight increase, as the supply side is not increasing at a faster pace,” he said.
On Mumbai’s realty versus others in Asia, developers point out that major Asian realty markets have grown at 20%-40% in the past four years against flattish growth in Mumbai.
“The respective governments in these markets might step in to arrest the price rise, but in Mumbai that’s not the case as the growth has not been as fast,” said Aggarwal.
Source: http://www.dnaindia.com/mumbai/report_realty-rates-drop-across-asia-mumbai-follows-suit_1632614
