Mumbai Property Market in Recession ?

As the Reality Sector has been worst hit in the recent/ongoing market meltdown, and as some Realty stocks have almost fallen by the wayside, things aren’t getting any better.

Though the builder lobby and the MCHI has changed track recently, and attempted to offer freebies like free registration, furnished homes etc , instead of biting the bullet and cutting prices, the demand has hardly picked up , as there were hardly any bookings in the recently held exhibition at Mumbai.

“What difference would an incentive make when there is nothing available for less than a crore?’’ questioned Rosalyn Edwards, a lecturer of MMK college, Bandra. “We just saw a two-and-a-half bedroom-hall-kitchen (BHK) flat on Jogeshwari-Vikhroli Link Road showcased by Kalpataru for Rs1.6 crore after the incentive. Not only that, admeasuring some 1,200 sq ft, the carpet area works out to barely 815 sq ft which seems nothing but a pigeon hole,’’ said Edwards. ..DNA

Property sales have plunged.

Further the more reliable govt stats also show a massive decline in Mumbai House Registrations.

Babasaheb Pardhe, the superintendent of stamps and registration, Mumbai said that there is a dip in the registration of flats. “One of the latest reasons is the economic slowdown and its effects on Mumbai’s real estate,’’ Pardhe said. Though the stamps and registration office in Mumbai has compiled figures up to August 31, 2008, the estimates show that September 2008 has seen further fall in registrations.

Though the stamps and registration office in Mumbai has compiled figures up to August 31, 2008, the estimates show that September 2008 has seen further fall in registrations.
“During the last financial year ending March 31, 2008, we registered 68,382 deals. This year, we have registered 23,502 deals till August 31,’’ Pardhe added….TOI

That is almost a 60% decline in registrations, showing that new property investors have made a complete exit while most genuine buyers are  preferring to wait.

So will there be a shakeout in the industry ? Will there be a rapid decline or Meltdown in Property prices in Mumbai or will it be a slow and torturous fall in prices to more reasonable levels ?

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13 thoughts on “Mumbai Property Market in Recession ?

  1. It is impossible to buy a decent flat in Mumbai today.

    Even if the JVLR flat costs Rs. 1.00 crore, how many middle // upper middle class families can afford it.

    Prices have gone up by almost 400% so a small reduction of 10%-15% has not changed the situation much.

    One of my colleagues bought a two bedroom flat at Goregaon for abt Rs. 45 lakhs. The carpet area is just 550 sq. ft. I guess we will have to call it a match-box.

    With foreign funds drying up, those astronomical returns from real estate seem to have evaporated and we will see a fall. How much and for how long is just a guess today.

  2. Hey thanks Anil for both ur comments

    You have got it spot on !

    The problem is that there is no will here
    and everyone is in it for the money be it the politicians – builders – mafia
    and banks – they don’t have the funds anymore and desperate people have no purchasing power without the coveted home loans.
    so they can no more hoodwink people into buying their properties at artificially high rates.

    some properties in USA, thanks to the us crises are
    are much cheaper than properties in mumbai.

  3. I guess you could buy lavish 4 – 5 bedroom houses in California. They may be cheaper as the sub-prime crisis continues to take its toll.

    btw – my name is Anil and not Ajay and Mavin is the first half of my surname. 🙂

    Cheers!!!

  4. Yes, buying property in Mumbai has become a dream for a middle class family…increased home loans making it even more difficult.

    How far one can go to get a decent flat if one is working in the city ? Sometimes it acts as a vicious circle.

  5. True Cuckoo,
    people do get sentimental n stupid for that dream home

    Mavin(Anil)
    sorry for the mix-up in names , i have corrected the comment
    being extremely busy these days, i have no time to blog or pay attention to stuff thus this error…

  6. there are signs that in both andheri east and west, property prices are dropping. and, builders facing a credit crunch have to reduce costs – especially those builders who have funds from FII’s

    i was reading something last week or so which said that there were too many builders focussing on the luxury end of housing and there being a great shortage of affordable middleclass housing — and how this crisis will shift the focus towards the middleclass…
    i can atleast , now, dream of buying a house … somewhere in mumbai 🙂

  7. true Harini,
    but i suspect it will be a long drawn out process

    Not just that Even stalwarts like Deepak Parekh of HDFC have lamented the problem and the focus on luxury housing
    i had covered it in an older post

  8. Builders are offering incentives like- luxury cars when you book a flat. With recession setting in, I am not sure if maintaining such luxuries would be easy.

  9. 🙂 Prerna
    U must be talking about the super premium luxury properties, but if even luxury sales are getting scarce , we are indeed in recession

    Most middle class people have to worry about daal roti and rising costs of everything first, then they have to see if they can get that coveted home loan !

  10. How about a 2800 sq. ft (carpet) 4 bedroom 3 bathroom + 1/4 acre plot+ 2 Car Garage bungalow with central AC and running Hot Water for only $ 20000 or Rs 10 Lakhs in USA. I just dont understand the logic in Mumbai. The problem is too much corruption and too much black money in the hands of politicians and their freinds, who want cheap slaves.

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