Residential realty rates rise despite slackening sales

According to data available with real estate consultant Mumbai Property Exchange,even those projects that are still in the pre-launch or just-launched stage have increased their rates recently. For instance,Lodha Dioro,which is part of the New Cuffe parade project at Wadala,Oberoi Exquisite and Esquire in Goregaon east,Indiabulls Bleu at Worli,Omkar developers’ Alta Monte in Malad East have increased their rates by at least Rs 1,500-2,000 since March this year. The firm’s CEO,Sandeep Sadh,said: “Most projects have increased their rates over the past six months. In fact,we would want price correction in the market only then would there be some movement.”

While project approvals were stuck for long as the drafting of the new Development Control Rules (DCR) took around a year and half,it was expected that rates would stabilise once the new rules are in place and more projects get sanctioned. However,Ramesh Nair,managing director at Jones Lang LaSalle,pointed out that there is no clarity on the new DCR yet. This has led to projects,which were in the pipeline and offered through pre-launches,not getting launched yet. “Due to the economic uncertainties,people have put their buying decisions on hold,adversely impacting sales. Developers are facing huge liquidity issues and are now dependent on high net worth individuals,private equity funds and non-banking finance companies to fund their projects,” said Nair.

According to sources,a few developers are willing to negotiate considerably on bulk deals. One such builder,who is reeling under severe funding issues,recently offered his Bhandup project to investors at heavily discounted rates of less than Rs 2,000 per sq ft.

Nair said as long as developers fail to address the affordability factors,sales won’t take off. As per data from the real estate research firm Liases Foras,as on March 2012,there were 1.13 lakh unsold residential units in the Mumbai Metropolitan Region (MMR). According to another report by PropEquity Analytics,in the first quarter of 2012,home sales in MMR registered the country’s sharpest drop of 58 per cent year on year. This was owing to high interest rates,a slowing economy and the affordability gap. “Everyone wants to launch super-luxury housing whereas the need of the hour is affordable housing. Eventually developers will bring down the sizes if not the prices of their homes as had happened during the slowdown of 2009,” said Nair.