RBI cut the repo rate by 25bps and left the CRR unchanged on 19/03/13. Bankers stated that this will not induce them to cut mortgage rates. Both consumers and realtors were disappointed with RBI’s hawkish view on future cuts.
Mumbai property market is immune to mortgage rate movements. Once again, we reiterate our belief that Mumbai is gearing up for a price correction (15-20%) or time correction (stable prices for next 2/3 years), as projects receive approvals and get launched through CY13. More recently, the market has witnessed signs of weakness, with more realtors announcing benefit schemes, such as the 20:80 scheme (equivalent to 8-10% discount), floor rise waivers, etc.
Gurgaon will continue to surprise positively on new sales momentum in CY13 as well as the high presence of investors and end-users from five neighboring states. Prices, however, are expected to remain under pressure in locations outside prime areas, such as Golf Course road
Bangalore and Pune residential market is the most correlated to mortgage rates among tier I cities. If mortgage rates don’t fall below 10% in 2013, we expect annual residential sales to remain flat YoY.
Office & Retail segment – Potential recovery in 2H13
Enquiries for office properties have increased significantly. Further, a change in trend that could be
observed is that companies are actually buying land instead of taking it on lease. About 40% of the demand
is from the IT sector, 30% from manufacturing, 10% from BFSI and 20% from other services.
Rents likely to trend up in the near term. He expects absorption to increase for almost all cities by 10%.
Office rentals in Bengaluru are close to their previous peak, whereas in Mumbai they are still off by 35-40%
compared to their previous peak
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