MUMBAI MARKET
September 2015
A re We R e a l l y H e ad i n g f o r a C r a s h ? It is important to ascertain the reasons behind the current realty trends in Mumbai and not give in to the speculative stories about the market crashing which are rife in the city, says SANDEEP SADH
T
he real estate market in Mumbai is ripe with news that the markets are artificial and there is an oversupply in the offing. Some research reports suggest that 200,000 apartments are available and other reports say the markets will fall by 50 per cent. Another suggests that the number of launches have reduced in the Mumbai market, but one should understand the reason for this as well. Just because launches have not happened, it does not mean that there is an issue with the developers; it could also be a stalemate. I was at a Confederation of Indian Industry (CII) real estate conclave in July and every panel of developers unanimously blamed the government for delayed permissions and approvals. Let us analyse the stories here and understand once and for all where the markets are headed. Monsoon months are known to be weak in real estate transactions and these added speculative stories without any proper understanding of the real estate markets dampen the spirits, just because of the vested interest of a few stake holders.
To analyse the real estate market in Mumbai, let us break this article into numerous segments, which talk about various aspects of the real estate market and then towards the end, come to some consensus as to which way we are going. Is the fall staring in our faces, or is it stagnation, or will they rise, contrary to all reports?
READY POSSESSION FLATS IN MUMBAI One of the most important factors in a price correction or dip in the real estate market in any geography is the ready possession stock or unsold inventory in a project/building. This ready possession stock is from the primary market, which refers to the leftover unsold stock with developers and builders. In any mature market, if the developer is left with up to 10 to 20 per cent unsold inventory, it is quite standard.
QUICK FACTS • Before blindly believing reports that a market crash in Mumbai is imminent, it is wise to understand the dynamics of the current situation. • With the rupee being at its weakest in August, it’s a good idea to take advantage of the reduction in prices and the fall in the rupee, which can together make the price attractive by anywhere from 10 to 15 per cent.
The primary reason for this is that after the project reaches its top slab the sales plummet as the payment due is almost 90 per cent and completion of the project takes another 27