Mumbai’s property markets, where prices earlier crossed Rs 1 lakh per sq. ft in South Mumbai, are seeing a 20-25 per cent markdown from last year’s levels.
“Today developers are ready to sell at Rs 40,000 per square (sq.) foot (ft). Last year, they were selling at Rs 50,000 per sq. ft,” says Sudha Kumari, a real estate broker in the Dadar East area of Mumbai.
That is 20 per cent lower than last year’s prices.
“Developers are worried about their loans. They want to sell, but buyers are in no mood to purchase,” says Kumari, highlighting the desperation of developers.
Kumari hits the spot. Sunil Solanki, a real estate investor in the same area, says he will buy properties when prices come down 30 per cent.
“There are good opportunities to buy now. But I feel prices will correct further,” says Solanki.
Faced with no movement in sales in the past three-odd months due to lockdown and Covid-19-related issues, property developers are resorting to price cuts across Mumbai’s main residential markets.
Sales have come down 61 per cent in the Mumbai Metropolitan Region (MMR) in the first half of this year, says Anarock Property Consultants.
On a half-yearly basis, they are down 51 per cent.
At 209,560 units, the region has the highest unsold inventories in the country.
Mumbai’s property markets, where prices earlier crossed Rs 1 lakh per sq. ft in South Mumbai, are seeing a 20-25 per cent markdown from last year’s levels, say some local brokers Business Standard spoke to.
This is probably the highest decline in the past decade.
If Central Mumbai developers are stressed for funds, in markets such as Thane, it is oversupply which is forcing developers to slash prices, say local brokers.
Active sanctioned loans to the Indian real estate stand at Rs 8.1 trillion; Rs 1.2 trillion worth of loans were sanctioned to developers in 2019-20, reveals CRE Matrix, a real estate analytics firm.
The MMR accounts for 42 per cent of this exposure - the highest among all cities/regions.
Only Navi Mumbai markets are holding up and discounts are a smidgen low in the western suburbs of Mumbai, compared to the central suburbs, due to limited new supply, say experts.
HDFC chairman Deepak Parekh said in April this year that property developers should be prepared for up to 20 per cent fall in housing prices, and must create liquidity by selling their inventory at whatever prices they get.
Union Minister Piyush Goyal echoed Parekh’s views later.
Goyal asked developers to reduce prices and sell their inventories rather than wait for the market to bounce back.
“Unless you reduce your rates, you will be stuck with inventories.
"You can be stuck with that and default or get rid of whatever you quoted at high prices.
"Consider it a bad decision and move ahead,” he said. Local brokers already see prices crashing.
Says Vinit Matlani, managing director of Rudram Realty, a prominent broker in Mumbai and Thane: “In Thane, prices are easily down 20-25 per cent. All developers have cut prices. If you make full payment, there will be further discounts,” says Matlani.
He says all reputed developers, such as Lodha Group, Kalpataru Group, Piramal Realty, are offering discounts.
“No one will make buyers unhappy due to prices,” says Matlani.
Many say the price cuts are desperate attempts by developers to generate sales which were subdued for the past five-six years due to inflated prices.
“This is a buyer’s market. Developers are ready to do anything. There is complete deadlock. There are no sales, no transactions, no registrations,” says Rajesh Mehta, a prominent consultant in the western suburbs of Mumbai.
“The situation is worsening. Nobody knows what is happening,” he adds.
However, big national developers do not agree that prices have crashed.
“The day prices come down 20 per cent, it means buyers will not be able to afford it.
"This means gross domestic product is low, job insecurity is high, inflation and interest rates are also low.
"The food chain is disturbed,” says Sanjay Dutt, managing director and chief executive officer, Tata Realty & Infrastructure.
However, property consultant Anarock says prices remained rangebound in all the top cities in the first half of this year.