Mumbai Property Registrations Drop in Feb

Property registrations in Mumbai (upto Dahisar in the north and Mulund in the east) remained steady but first signs of slowdown in transaction volumes are evident. After achieving a peak of 9,118 registrations in Dec 2009, Mumbai saw 6,022 registrations in Feb 2010, which represents about 6% MoM drop compared with 6,398 registrations in Jan 2010 and is the lowest number of monthly registrations since July 2009. We believe the rapid 30%-50% price increase across Mumbai will continue to dampen demand and we see no major upside risk to volumes in H1CY10.

Prices across Mumbai have almost crossed the peak levels in Q1CY08 and have risen by 30%-50% from lows seen in CY09 across micro-markets, making homes unaffordable for buyers even in an environment of improved job security and salary hikes. Developers have again chosen to focus on super-premium projects with ticket sizes of more than Rs50mn in southern and central Mumbai, where penthouses and duplexes are in vogue.

Latest Kolkata Property Prices

Kolkata Residential - The market for residential property has witnessed a distinct movement as Kolkata is breaking with the past. Projects of reputed builders such as DLF and Unitech are burgeoning in the peripheral suburban areas of Kolkata due to the emergence of the city as an upcoming IT destination of India. Upscale localities and high rises have started dotting the city's skyline. Rajarhat is also becoming lucrative investment destination among NRIs and HNIs as it offers world class facilities. Salt Lake is now witnessing stabilisation in rentals for short term.

Kolkata Property Prices -March 2010

Area / Residential / Commercial - How to Read ? [Park Street - Residential properties range between Rs 2200 to Rs 3800 and commercial between Rs 4500 to Rs 6000 per sft]
Park Street 2200 - 3800 4500 - 6000
Lower Circular 1800 - 2800 3000 - 5000
Belvedere 2500 - 3600 3000 - 5000
Ballygunge 2500 - 3800 3200 - 5500
SouthernAvenue 2400 - 3200 3500 - 5200
New Alipore 2000 - 2700 3000 - 4000
Santoshpur 1300 - 2100 2800 - 4200
Salt Lake 1600 - 2100 2500 - 4500
Shyambazar 1350 - 2000 2000 - 3500
Bahala 1200 - 1800 2000 - 3000
Lake Town 1300 - 1500 2000 - 2500
Gaira Garle Road 1000 - 1700 2000 - 3000
Naktala Road 1100 - 1400 1800 - 2200
Garcha Road 1600 - 1800 2000 - 2400
Prince Anwar Shah 1200 - 1800 2000 - 3000
Kaikhali VIP Road 800 - 1600 1800 - 3200
Dumdum Road 1800 - 2400 3000 - 7000
Dumdum Park 1900 - 2400 3000 – 4500

Godrej Garden City, Ahmedabad

A 10-year township project of >40msf development (over ~300 acres) off SG Highway, 20 minutes from the heart of the city. While it is largely a residential land development, a minimum of 70% will be residential (given the ambiguity about township rules in Gujarat). It is a JV with a local builder, which is to acquire all the land.

Management mentioned that the bulk of the 300 acres has been acquired. The project will be developed in phases: Ph-1 is to be launched in Mar10 – 1.0msf of residential at Rs2300-2400 /sf and 1,000sf unit size. Construction costs- contract with L&T at Rs 995/sf. Focus for next 2-3 years will only be on residential development.

Residential Price Rise Not Good

You've got to love this because the Real Estate Residential market has become so sensitive to price rise that volumes and registrations tell us the consumer behavior in this market. It is evident from what Anuj Puri of Jones Lang Lasalle Meghraj India said,

Residential volumes have come down by 25-30% Q/Q in 4Q09 given an increase in prices. Volume moderation has primarily happened in mid market (Rs 3-8MM), however, affordable (<>Rs 10MM) segments continue to do well. Going ahead, JLLM expects the volumes to stabilize at current levels, implying that the best may now be behind us.

It also tells us that Speculators are out of the Real Estate Market and the biggest non-essential player left is the Muscle Powered Goons :-)

The service tax burden (3.3% of sales value for new sales) is likely to be passed on to end users, thereby pushing up rents/prices.

Tier 2/3 cities seem to losing their sheen as incrementally office/retail demand is shifting to tier 1 cities (Hyderabad/Chennai) as rentals become relatively affordable in metros and tier 1 areas.

Apartments Costlier by 3.3% - Courtesy Budget

The imposition of a service tax on the buying of under-construction property will likely result in an additional cost of up to 3.3%, which we believe will be passed on to the buyer.

Budget documents indicate that government intends to recognize construction activity as a service provided by the developer to the buyer. We believe the imposition of service tax will be debated extensively and full clarity on the proposal will likely emerge in a couple of months.

The service tax is applicable for (1) construction of complex service under sub clause (zzzh) and (2) construction of ‘commercial or industrial construction service under sub clause (zzq). ‘Construction of complex’ means construction of a new residential complex (with more than 12 units) or completion and finishing services in relation to a residential complex.