MUMBAI, June 7: A report by property consultant Knit Frank says that realty prices in Mumbai appear to have bottomed out in most places and that there is likely to be a marginal decline in prices in the next six months.The proposed reform of the Rent Control Act, repeal of Urban Land Ceiling Act, approval for sale of textile mill lands, implementation of slum rehabilitation scheme and other reforms are likely to impact property prices in the long run in Greater Mumbai, the report, entitled `Property review of Mumbai', says.The overall outlook for the near term seems slightly dim. The overall outlook for commercial property for the near term continues to appear grim as there was not a single factor pointing to a renewal of buoyancy in the market. "There are conditions of excess supply in most commercial districts and these conditions are likely to continue if prices are not negotiated downwards and volumes begin to improve."The values of properties in posh south Mumbai have only declined by 15 percent on an average. These locations include Napeansea Road (Rs 10,000-Rs 25,000 per sq ft), Altamount Road, Carmichael Road (Rs 12,000-Rs 25,000/sq ft), Warden Road and Breach Candy (Rs 10,000-Rs 20,000/sq ft). The values of flats in these buildings will start firming up once again in the near term.Under prevailing market conditions, a lessor can expect a reasonable yield of 6 to 8 per cent annually on the market value of the apartment. Depending upon the fixtures and fittings offered to the lessee with the apartment, the rate could be a little higher.Non-prime residential areas of south Mumbai, including Cuffe Parade, Marine Drive, Churchgate (Rs 9,000- Rs 16,000/sq ft), Walkeshwar/Peddar Road (Rs 9,000-Rs 15,000/sq ft) and Mahalxmi/Tardeo (Rs 8,000- Rs 13,000/ sq ft) have seen a greater decline of up to 20 per cent. The prices in these areas may have also bottomed out.Residential buildings in central Mumbai, including Worli (Rs 9,000-Rs 14,000/sq ft), Prabhadevi (Rs 6,000-Rs 12,000/sq ft) andLower Parel (Rs 5,000-Rs 9,000/sq ft) have also fallen by approximately 15-20 per cent over the last two years. There was muchnew development activity in the area which has been affected by excesss supply. The report expects prices to decline further.The most drastic fall in residential property values has been in the suburbs. Outright values of properties in Bandra (Rs 9,000-Rs 14,000/sq ft), Khar (Rs 7,000-Rs 13,000/sq ft), Juhu-Vile Parle (Rs 7,000-Rs 10,000/sq ft), Andheri (Rs 4,000-Rs 8,000/sq ft), Versova (Rs 4,000-Rs 8,000/sq ft) and Santa Cruz (Rs 7,000-Rs 12,000/sq ft) have fallen by 20 per cent-25 per cent from their 1995 peaks. "Once again, there is a lot of supply available in these areas, and it is likely that prices will continue to move downwards in the coming year," the report adds.There is still a large amount of commercial space lying vacant in the Nariman Point area (about 8 lakh sq ft) with previous lessees unwilling to pay the astronomical rates that are still being demanded bylessors. However, rentals have come down significantly- offices that were being leased at Rs 250/sq ft per month are now readily available at Rs 150 - Rs 175/sq ft per month. "Even at these levels there are only a handful of takers."The same can be said about commercial properties in other parts of South Mumbai (Fort, Ballard Estate, Cuffe Parade, Marine Lines and Churchgate) where prices have dropped by 42 per cent on average from their 1995 peaks. Volumes of outright purchase transactions were at a record low (10 per cent of that at the height of the property boom) on account of the liquidity crunch, the absence of speculative buyers and the growth in the number of leave and license agreements.Outright prices of commercial property in Central Mumbai are expected to soften in the next quarter on account of the excess supply conditions prevalent in the region (about 15 lakh sq ft). This is the same with Andheri-Kurla, Chembur and Ghatkopar. However, prices in the Bandra-Kurla complex and SantaCruz regions may not fall further. Current average outright office rates in Bandra have been Rs 9,000 - Rs 14,000/sq ft, Andheri/Kurla road- Rs 5,000 - Rs 8,000/sq ft and Navi Mumbai- Rs 2,000 - Rs 3,500/sq ft.
