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

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...
 
Looking to buy property in Gurgaon? are you on right track?
Published by Mike Nicholson on February 10th 2012 | Real Estate
If you’re planning to buy property somewhere in and around Gurgaon, this article is primarily mean...
 
Rental property- its difficult to find without estate agents
Published by Matthew Watson on April 16th 2012 | Real Estate
A proper research of the property market, its trends and different rents in different localities nee...
 
Find your ideal property in Andalucia
Published by Melissa Welsh on March 7th 2012 | Real Estate
The real estate industry is constantly evolving. One month everybody is flocking to purchase propert...
 
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...
 
Get a good office property in Gurgaon
Published by Atul Sharma on May 21st 2012 | Real Estate
The article is based on real estate property in Gurgaon. It talks about how you can get a good prope...
 
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...
 
Strata property investment advantages
Published by Chris Whelan on December 27th 2011 | Real Estate
In almost every country strata management property investment is getting more popularity due to its ...
 
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...
 
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....
 
Rules when renting a property in Malaysia
Published by Jeevan Nanthan on June 10th 2012 | Real Estate
This document describes all the terms and conditions about the contract in detail. In case of violat...
 
Guarantee continuous income with sensible property investments
Published by Sophia Milller on December 13th 2011 | Real Estate
There are so many places where you can invest your money. Buying assets is the best thing to do when...
 
Tips on running a commercial property management firm
Published by Carolmoore on March 1st 2012 | Real Estate
Owning property can make you set for life. Considering the high prices of land, owning a piece can b...
 
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...
 
Real Estate Agent can be a good Profit maker for your property
Published by Mayank Gandhi on February 28th 2012 | Real Estate
feedbackhere.com: We provide easy to find Real Estate Agent for consumers vendors to make searching ...
 
How to find your perfect property
Published by Ramikenig on December 7th 2011 | Real Estate
With the Dubai property market experiencing a spike in sales prices over the last 3 months it is onc...
 
Delimitate facilities with affordable investment in residential property
Published by Bhubaneswar Property on May 14th 2012 | Real Estate
The most prime factors for choosing flat at Bhubaneswar are very good communication, close to IT Sec...
 
Buying a home Vs Renting a property
Published by Glyn Jones on December 30th 2011 | Real Estate
Buying or renting a property has their own merits and demerits. Where renting a property gives short...
 
What a property Valuation Report Shows Us
Published by Ariel Linford on April 18th 2012 | Real Estate
Property valuation report is the best and easiest way to get a perfect and accurate value of your pr...