Article Side

Online Article Directory!

Hello Guest! Login or Register to submit articles!

Mumbai property price is not expected to fall in near future

By Prop Tiger Subscribe to RSS | July 18th 2012 | Views:
loading
 
  



Chairperson of Knight Frank, Mr. Pranay Vakil offers his views on this trends in Mumbai's realty

market.

Q: The question that the majority folks would raise is that the quantum of Rs 1.4 Lakh crore of unsold residential property in Mumbai is fairly huge, however might not be the precise quantum as an outsized share of this went on within the past. The Mumbai realty doesn't appear to crack. What's your belief regarding what's going to happen this time?

A:  Let me clarify that we have a tendency to are solely talking regarding the residential market. Therefore allow us to specialise in that. Currently the valuation that you just talked regarding is at current market values and not at price. Therefore, it's not hurting the developer the maximum amount as you would possibly assume it will. Currently of these developers a minimum of fifty percent of them  are in an exceedingly joint venture with the landowner. And have the developers obtained the land? The solution is  no or very partially. Currently after you haven't obtained the land  and the land constitutes virtually seventy percent of the sale worth your ability to carry on is infinite.

Secondly, the funding that comes through is merely meant in touch the development price and not for acquiring the land. Since, you haven't obtained the land, holding on does not hurt you. Yes, the interest prices have gone up, however that affects solely the development and during this residential section, as long as you're booked or sold, you're able to take cash against it. You will have a negative operating capital state of affairs generally. What which means is that you just have recovered quite what you spent on that specific project, not counting the land. This will lead to some pain to scale back the value, however that pain isn't sufficiently big for you to try to do that. Therefore in very basic terms, this can be why the costs haven't come back down.

Q: We have a tendency to stick with it hearing each currently and then regarding realty firms, in Mumbai notably. Borrowing Rs 30-40-50 crore or Rs one hundred crore at interest rates of 36 percent or northwards, that's strange. If the builder or the real estate developer isn't in pain, why would he do this?

A: This normally happens throughout the end of quarter, as a result of some loans are falling due for reimbursement and this can be not the overall funding that has taken place at thirty six percent. This can be simply bridging finance or a marginal finance. After you borrow Rs 2000 crore and you would like one hundred crore to pay the interest which is what's borrowed at this very high rate, not the whole project. You can't afford to borrow at that rate and keep alive.

Q: Returning right down to the exhausting numbers, Rs 1.4 Lakh crores is that the stated range in your report of unsold inventory. Firstly, where is that this unsold residential property in Mumbai is  blocked immediately within the region of Mumbai and the way can the events pan out in terms of who can blink initial on the pricing front?

A: Let me tell you the rationale why folks don't purchase and what's holding them back. There are solely three reasons why folks don't purchase. If they expect the costs to come back down, they're going to clearly place their purchasing on hold. Secondly, the interest rate is hurting them; and eventually, they need no confidence within the developer confidence that the developer can deliver the merchandise that he's paying for. Currently if you address these three problems, you'll have revival of demand. Therefore how does one address a problem like expectation of costs to fall? In the buyer's mind, a five percent or 10% fall in worth isn't aiming to place him off. However, when he sees that the costs would possibly fall quite that, he can place his purchasing on hold as a result of the stamp duty and alternative expenses are regarding 10% anyway.

Q: Does one acquire that may happen over a ten percent drop in Mumbai real estate?

A:  We have a tendency to see that happen and have seen it before additionally. We have a tendency to are talking regarding the elasticity of the developers their ability to carry on. Like I explained before, the role of the land part, however as long as that capability is there to carry on, they're going to not.

I will conjointly imply the results of a worth reduction. As some developers could have sold a region of the project, the consumers would possibly return and raise for a rebate, which could produce lots of issues. Therefore, the very last thing they're going to do is cut back the value. They may freeze the value, they may have the parking fee, they may even acquire the stamp and registration fee, however an outright deduction within the costs are going to be the last resort.

Q: You're not giving excellent news to lots of individuals out there who are planning to purchase residential property in Mumbai and are looking forward to the costs to come back down. Does one assume six months down the road, things might change? There would be some pressure points which might are available in as a result of you can't have buildings of residential property with no one staying in.

A: You'll definitely realize a disparity between completed projects and below construction residential property. You may realize that completed residential property in Mumbai will get sold. If someone is in a position to pay the cash and take delivery, yes, he can purchase it. However, if you're asking to book one thing below construction, those three factors that I told you come back into play and that they then need to attend and watch. Buyers are, in fact, willing to pay a premium for a completed project, as a result of there are not any ifs and buts left

.

Q: Does one recognize that of the developers I don't recognize if you'll name anyone has the very best pushing of unsold inventory?

A:  We've mentioned five developers in our report - five prime developers in Mumbai. If you explore their borrowing position, they need to repay specifically half (maybe somewhat but half) of the unsold inventory that they need.

Prop Tiger - About Author:
Prop Tiger is an independent real estate advisor with a pan-India presence. We aspire to be your first port of call if you want to buy a property in mumbai.

Share on Facebook Tweet It Stumbleupon this post This post is delicious !

Article Source:
http://www.articleside.com/real-estate-articles/mumbai-property-price-is-not-expected-to-fall-in-near-future.htm

Related Real Estate Articles Subscribe to RSS

Bienes raices en Aruba can provide the answers to all your worries related to your property
Published by Sothebysrealty Aruba on March 16th 2012 | Real Estate
The best way to find property in Aruba is to get hold of a real estate agent in Aruba for the best r...
 
Seeing the Huge Benefits in purchasing property in Greater Noida
Published by Sanjay Kumar on August 9th 2012 | Real Estate
The investment within the property will never move into vain as a result of the property rates withi...
 
Lucrative Greek property for Sale
Published by Greekexchange on May 21st 2012 | Real Estate
Greece the name itself runs a smile on our face as it is the most preferred place for honeymooners a...
 
Buy residential property on rent
Published by Vicky Martin on June 18th 2012 | Real Estate
Never neglect tenant issues that are brought to your attention. This leads to dissatisfaction, late ...
 
Why you should rent a property for your family?
Published by Andy Wagon on February 15th 2012 | Real Estate
To determine which properties are good indeed quite difficult, especially when some properties are n...
 
Relying on the property solicitors is must and knowledge to be acquainted with
Published by Hemton Thomas on February 4th 2012 | Real Estate
The majority of people put their property on the market with property solicitors....
 
Looking to buy a commercial property in Gurgaon?
Published by Mike Nicholson on March 20th 2012 | Real Estate
Do you want to have your office at a prominent location where you can proudly invite your clients? D...
 
Hire estate agents Marlow for smooth property deals
Published by Ricky Charles on January 4th 2012 | Real Estate
Many businesses have flourished and doomed but the real estate business has somehow managed to keep ...
 
Why one should invest in property in Greece?
Published by Greekexchange on January 10th 2012 | Real Estate
Greece is one of the most beautiful places in the world; people from all over the world visit this c...
 
Assistance from a good estate agency is essential in property investment
Published by Glyn Jones on January 4th 2012 | Real Estate
The estate agents can help you with the property dealings. They can make it really very easy for you...
 
Get best property deals through web portals
Published by Maaya on May 15th 2012 | Real Estate
It has become a trend to buy and purchase the property in metro cities, thickly populated and it als...
 
Know some facts before getting in contract for property buying
Published by John Mathews on July 20th 2012 | Real Estate
While you are looking to buy a home, there are certain things that you are to take into consideratio...
 
How you can buy residential property on rent
Published by Glyn Jones on June 11th 2012 | Real Estate
Apartment buildings are more complex. Often, people are already living in the suites, and it simply ...
 
Equity for buying strata property investment
Published by Chris Whelan on January 3rd 2012 | Real Estate
Equity in strata property is helping most to fulfill their dream of owning a property and can save m...
 
Know about property management in Marlow
Published by Ricky Charles on January 4th 2012 | Real Estate
In most parts of the world, property rates are going up and people who have invested in property are...
 
Building a "Buy to let" property portfolio
Published by Jordan Beard on May 9th 2012 | Real Estate
Investing in a portfolio of rental properties in desirable areas throughout the UK is a sure fire wa...
 
Online networking and property selling
Published by Matthew Watson on May 21st 2012 | Real Estate
There are many e-portals, which provide details on properties for sale. Anyone who wishes to put his...
 
Look out for the best property in Houston, Texas
Published by Brad Hermes on May 25th 2012 | Real Estate
Houston real estate market is reaching great heights in the United States. As the demand of housing ...
 
HOA management- Capable providers for financial as well as property management
Published by Ema Sis on January 12th 2012 | Finance
HOA management companies shall be actual asset for communal administration amenities. They undertake...
 
Best price property for sale in Mumbai
Published by Andy Wagon on February 14th 2012 | Real Estate
Owning a home is more than one can indeed serve as an investment in the future, especially if house ...