Mumbai Property market is correcting and hopefully correcting big time. I had expected it to correct at least 20 to 60 % from its peaks depending upon its grade as valuations had become unrealistic and the Greater fool theory ruled.
The last big sale happened about eight months ago when a flat measuring 3,475 sq ft (super built up) in the NCPA Apartments at Nariman Point was bought by a London-based NRI at the rate of Rs 97,842 a sq ft.
The market was showing signs of fatigue after the collapse of deal on the Citibank flat auction to BJP MP Vinod Khanna and his wife Kavita, who paid Rs 30 crore for the 2,500 sq ft (carpet area) flat located on the 13th floor of the B wing. The deal worked out to Rs1.20 lakh a square feet, an all-time high.
The stock market crash and more so the crash in property stocks that fell much below ipo prices some even by 70% from record highs coupled with the high inflation , high interest rates, tough background checks and rbi clampdown on loans to builders due to the property bubble has meant a sharp fall in demand and it shows. The shows hawking property on NDTV and CNBC and the paid news reports of properties still being a lucrative option, in prominent papers, have fallen to deaf ears as demand has simply crashed thanks to the builders desperately attempting to hold prices – some even taking huge loans at phenomenal interest rates ranging anywhere from 20% to 36% annually from the old marwadi moneylender network. read Now, moneylenders fund cash-crunched builders.
Little wonder – Property prices in new construction in Bandra have fallen.
Bandra, Khar, 3 months ago (per sq ft rate)
Rs 25,000 to Rs 22,000
Rs 13,000 to Rs 16,000 ‘Rates in Bandra will fall to Rs 12k/sq ft’