Further Fall Eminent !

Applicability of VAT on under construction flats, enhanced interest on home loans, rising land and construction cost, short supply, cost of funds to be paid to venture capitalist, increasing builders margin and well established speculator network are some of the factor which will influence real estate market to kill the demand for housing. TDR is now become share market, sold and purchased every day and is having rates change every hour. All these factor will lower the affordability of the home purchasers. Not every person is earning Rs.25,000/- per month and informal sector been treated as step brotherly treatment. Hence very few disparate takers are in the market. People who have got handsome funds by selling their property for redevelopment are few who do not care for high cost of purchasing a property, are also vanishing from the market.

For commercial, builders and developers are not selling any property but want it to be given on rent. Huge overhead and monthly expenses are taken care of by such rental incomes. Hence lease rental and commercial property rates will become dearer in Mumbai.

Scraping of ULC in the next session of Maharashtra Assembly, Huge projects are likely to be launched soon. An estimate says, it will be 10 crore sq.ft. will hit the real estate market in mid 2008. Since banks have enhanced the rate of interest, many borrowers, who have over stretched already, will go in for NPA or open market sale.

Real Estate market is already witnessing fall of 25% in property prices in extended suburbs. Average good locality flat in Thane, Navi Mumbai and Mira Road have fallen 25% to 35% of November 2006 level.

Speculators are sitting on fence for opportunities. They want to sell the ready stock in international market. Dubai, London, South Africa and UK buyers are finding the property cheap, since they do not know the market conditions. Real Estate Funds, who have interested in various development and funded for historically high cost of land and FSI purchase, are not interested in selling for less. Hence market is witnessing new corporate buyers for residential units, just changing hands with speculators. Builders are restricting purchasers to sell their flats in open market for next three years, due agreement are entered before handing over the possession, thus, managing price fall temporarily.

After some of the media reports, purchasers are waiting for a fall. Pundits are predicting a major correction in property price in suburbs and extended suburbs. South Mumbai will go still strong since there is hardly any supply.

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source: accommodationtimes.com