Planning to buy a house in Mumbai, now is the time!
The finance minister’s recent appeal, to bring about a reduction in the prices of properties in the country, doesn’t seem to have gone completely unactioned. Mumbai seems to have been the first mover to take heed of this appeal and take action accordingly. The city, known also as the financial capital of India, has seen several large builders cut per square foot rates of their projects to the tune of INR 5000.
In Goregaon, the Exotica project, by RNA Corp, had priced its two and three bedroom apartments at INR 11,750 per square foot. Now they are selling the same flats at INR 9,950 per square foot, post the finance minister’s appeal.
Naman Midtown, in Elphinstone, saw a similar trend with a slashed price range of INR 20,750 to 22,500, now being advertised, as compared to INR 22,750 to INR 27,000 earlier. On average, a price cut of 2 to 5% has been seen across the property market. Some developers, however, have preferred to introduce flexible pricing, and irresistible prices at pre-launch, in an effort to gain some much needed capital. Lodha Group is giving discounts up to Rs 5,000 per square feet to those booking their apartments in the period between January 18 and 28 at their Worli development, codenamed Blue Moon.
While most properties in Worli are being advertised at Rs 29,000 per square feet, Lodha seems to be offering their two, three and four bedroom flats in the two towers at Rs 23,991 per square feet with its new IPO-like approach.
“South Mumbai today is selling on large floor plates and that’s driving up the property rates in excess of Rs 8-9 crore; and that’s caused most buying population to stop looking at South Mumbai. We wanted to get that corporate audience and the buying audience back here. So, we are selling at Rs 23,000 at pre-launch, which comes up to Rs 3-3.5 crore,” R Karthik, the chief marketing officer at the Lodha Group, says.
It is obvious that extravagantly priced homes are not selling anymore even in a city known for its large HNI base. Several builders are now desperate enough to negotiate with buyers discreetly as they face a liquidity shortage and increasing capital cost.
Stocks of Mumbai-based realty companies, underperformed on the National Stock Exchange’s Nifty index in January so far on concerns over liquidity issues. Several of them are being forced to sell off stocks to bridge the funding gap, with Housing Development and Infrastructure (HDIL) being the most recent example that sold shares to fund land acquisition. While HDIL lost 26 per cent, Orbit shed 20.23 per cent for the said period.DB Realty also lost over 8 per cent.In contrast, the 50-share Nifty index gained 2.8 per cent.
However, the moves seem to have paid off as developers are seeing better response from customers.”We got a good response and good bookings happened wherever we have given even a slight discount,” says Mr Mantri, of Mantri Developers.
“From January to March is a good time for investors and end users, as these developers are going to be starved for funds; they have to pay back the leverage they have taken, service the loans, pay back interest to the banks. This is an opportune time one can sniff around to buy a house, and get a good deal,” says Ravi Ahuja, the executive director of Cushman & Wakefield, India.
With developers looking to cash in on their products, this might be the time for buyers to make the most of it. However, it remains to be seen if this is the beginning of a much required price reform or just a temporary dip.