THOUGH CAPITAL values and the general sentiment in the property market have not seen an upturn in recent months, sales in Mumbai’s residential real estate sector have started picking up, with a 15 per cent rise in registration of apartment sales in the first seven months of the fiscal year as compared to last year.
Data from the Inspector General of Registrations shows that there were 43,608 housing registrations in Mumbai’s island city and the suburbs in the form of sale deed agreements, transfers, conveyance deeds and so on from April to October this year. This figure for the same period last year was 37,875.
Sales in the festive month of October were also somewhat higher compared to last year. There were 6,129 home registrations in October this year-nearly 25 per cent more than last year. In October 2014, when both Dussehra and Diwali were observed in the same month, there were 4,922 registrations.
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Developers attribute the rise in sale deed registrations to fence sitters who may have been waiting for a slide in property rates but are finally giving in and coming into the market. Paras Gundecha, chairman of Gundecha Developers, said, “Many potential buyers were sitting on the fence for a long time waiting for a drop in rates. But there is no scope for any significant fall in property prices considering high land prices and increasing amounts of premiums and other taxes that developers have to pay to the government.”
Analysts, however, pointed out that investors are still not bullish and the spurt in sales is likely to be on account of end users buying after a futile wait for a dip in prices. Developers have also said that pace of construction remains sluggish.
Lalit Kumar Jain, chairman of Kumar Urban Development Ltd, said that while there is indeed a glut in inventory, supply of ready stock is limited, leaving little room for fall in prices. “Real estate is not a speculative business for developers and so, whenever the market tightens, developers go slow on their projects. They don’t tend to speed up construction unless they already have a significant number of bookings for a consistent cash flow,” Jain said.
According to data compiled by Jones Lang LaSalle India and the Confederation of Real Estate Developers’ Association of India (CREDAI), only 2,600 or 3.35 percent of the total unsold stock of 77,260 units in Mumbai, Thane and Navi Mumbai, are ready for possession.
Jain added, “There hasn’t been any substantial improvement in the pace of construction clearances. The country has seen a bad slump in residential real estate, especially Mumbai. A rally in sales can signal a revival for the entire country as Mumbai always leads in sentiment.”
Experts say that though there hasn’t been much of a price correction as against expectations, even a stagnation in rates along with a drop in interest rates could have improved overall affordability for buyers. Pankaj Kapoor, managing director of Liases Foras, a Mumbai-based real estate research firm, said, “Property prices have stopped appreciating, while personal income has continued to rise. Besides, home loans have become cheaper and builders are willing to grant discounts. The cumulative effect of all these factors has resulted in at least a 15 percent improvement in affordability.”
Kapoor added that the real estate residential market in Mumbai was in doldrums when property prices were shooting up even as there was an economic downturn, and later its after effects, which kept any rises in personal income contained. “Between 2009 and 2015, property prices increased by about 25 percent at a compound annual growth rate. People’s earnings could not keep pace with this escalation,” he said.