Stubborn Mumbai Residential Price - Demand Affected

Residential prices in Mumbai continue to remain sticky.  Average prices are up by 49% since March 2010, which is higher than the national average increase of 41%, and are now 1.7X national average. We believe the price increase was on account of: (1) investor buying; (2) curtailed supply due to slower approval process

Sustained higher prices have led to lower affordability and consequently tepid demand. Volume absorption in March was lower by 25% yoy, while rolling 3-month average absorption has dropped by 15%. Recent absorption has fallen by 65% compared to peak level in Nov-2010. We estimate 15+% price correction is required in Mumbai to drive demand. 15% price correction along with lower interest rates/ marginal salary hike will improve affordability.

We have seen several developers offering structured schemes or reducing size of apartments (thus reducing ticket size) to boost sales. 20:80 subvention schemes are one of the most popular mechanisms to propel demand, in which the buyer has to make 20% upfront payment and balance after defined period/possession. Most developers are charging 2%- 3% higher prices on these schemes, but they offer customers an interest
savings of around 15% over a construction period of 3-4 years

Residential - Buy 1 Get 1 Free

We have been shouting at the top of our voice how unrealistic residential real estate prices were. Developers have now launched BUY One House and Get One Free.

Cosmos Prime Projects Developers has launched the scheme in Mumbai for its projects in Thane. The Advertisement sent to us says,

With the Purchase of a Bungalow of a 2 BHK, a 1 BHK comes FREE, While with a 2 BHK Flat, a 1 Room Kitchen is FREE.

You can view the entire scanned copy of the advertisement here. Let realty prices crash and get a little bit REAL.

Mumbai Property Rates - Part-II

In continuing our coverage on Mumbai's Residential Property prices, here is Part-2 of the same.

The property exhibition received a lukewarm response from the buyers in comparison to previous year. Most of the attendees had come to check the extent of the property price correction rather than buy. The majority of the potential buyers we spoke to found the price points unaffordable and did not find the discounts attractive enough.

All are residential properties
Name of the Builder, Location, Price / sft and Tentative Possession Date

• Rustomjee- Elanza Malad (W) 9,000, Urbanaia Thane (W) 5,130, Ozone Goregaon (W) 10,500
• Kalpatru Properties - Kalpataru Estate JVLR, Andheri 10,000
  Kalpataru Riverside Navi Mumbai Panvel 3,800
  Kalpatru Aura Ghatkopar (W) 7,800
  Kamdhenu Mulund (E) 5,200
  Shrusti Mira Road 4,750
• Dosti Group - Flamingos Sewree 15,000
  Acres New Wadala 11,600
  Vihar Thane(W) 5,750 Dec-2010
• Nirmal Lifestyle - City of Joy Mulund (W) 10,500
  Galaxy Mulund (W) 10,500 June-2009
• Mahindra Lifespace - Eminente Goregaon (W) 8,500
  Splendour Bhandup (W) 6,950
• Ahuja Construction - Clubbe Life Borivali (W) 7,500
  Karma Kastle Tilak Nagar, Chembur (W) 7,200 Dec-09
• Lok Housing - Lok Surbhi Kalyan (W) 2,300
  Lok Everest Mulund (W) 6,500
  Lok Raunak Marol, Andheri (E) 6,600
• Buildtech Builders - Orient Ganesh Navi Mumbai Koperkhairene 3,000 Nov-08
  Orient Ram Navi Mumbai Koperkhairene 2,700 Nov-08
  Orient Star Navi Mumbai Kamothe 2,500 June-10
  Orient Arcade Navi Mumbai Kamothe 2,500 June-09
• Royal Palms - Garden View Aarey Colony, Goregaon (E) 6,500 Jun-09
  Lake View Aarey Colony, Goregaon (E) 7,200 Ready Possession
  Summit Aarey Colony, Goregaon (E) 6,500 Ready Possession
• Supreme Universal - Lake Homes Powai 9,000
  Lake Primrose Powai 8,500
• Neptune - Color Scape Mulund (West) 8,991 Dec-09
  Living Point Bhandup 7,991
• Nahar's Amrit Shakti - Vinca, Yucca, Yarrow Chandivili 12000 - 14000 Apr-09
  Ivy, Mimosa, Tilia Chandivili 12000 - 14000 Mar-10
• Neelkanth - Kingdom Vidyavihar 7,500 Dec-09
  Woods Phase II Thane 5,600 Jun-09
• Oberoi Construction - Oberoi Exquisite Goregaon (East) 7500-8500 3-4 years
  Oberoi Splendor JVLR, Andheri East 14,000 Dec-09
  Oberoi Springs Andheri (west) 20,765 Dec-08
  Oberoi Woods Goregaon (East) 16,500

Mumbai Property Exhibition Rates

Our analyst tracking the Mumbai Property Market has an update on the rates at various projects as detailed in the Mumbai Property Exhibition. Many of the real estate developers gave discounts in the form of stamp duty and registration fees reimbursement to buyers, which accounts to a discount of 5-6%. No heavy discounts [20%] yet. So keep checking out before you BUY your dream home. If you are in for your second, you should be really RICH :-)

All are residential properties
Name of the Builder, Location, Price / sft and Tentative Possession Date

• Happy Home - Jade Garden Near BKC - Opp MIG Club 20,000 Oct-2010
• Kanakia Spaces - Niharika Thane (W) 5,000 Jun-2010
• Kohinoor - Kohinoor City - Phase III Kurla (west) 8,800 Dec-2009
• M S Shah Developers - Olive Andheri E 6,500
• Man Infraprojects - Valley Vista Navi Nerul 6,000 Apr-2011
• Mantri Real Estate - Mantri Park Goregaon (E) 5,550 Jun-2009
• Mayfair Housing - Silver Juhu 17,000 Dec-09
• NeelSidhi - Atlantis Navi Nerul 5,600 Dec-10
• Skyline Group - Skyline Oasis Vidyavihar (W) 9,000 Ready for Possession
• Bhoomi Rock Enclave Kandivali W 6,500, Rock Avenue Kandivali W 6,500, Elegant Kandivali E 5,700 - Ready for Possession
• Damji Shamji Shah Group - Mahavir Milestone Thane W 6,800, Mahavir Universe Bhandup W 6,561, Mahavir Millennium Thane W 4,951, Mahavir Platinum Cheda nagar 6,750, Mahavir Empress Ghatkopar W 8,000 Dec-2009
• Rajesh Builders - Raj Legacy Vikhroli W 10,400, Raj Maximus Borivli W 9,500, Raj Sunflower Borivli W 11,500 March-2010
• RNA Developers - RNA Sapphire Andheri W 11,000, RNA Royal Park Kandivali W 6,500. March 2009
• Godrej Properties - Kalyan 3,000 July-2010
  Planet Godrej Mahalakshmi 35,000 - March-09
• Akruti City - Gardenia Mira Rd E 3,650, Vedant 9,500
• Hiranandani Estates - Villa Grand Thane 6,100, Canary Thane 6,600
• Acme - Ozone Thane W 7,500, Amrut Dahisar E 4,500
• Sheth - Grandeur Vasant Marvel, Borivali (E) 7,600, Polaris Goregaon W 11,000
  Ivy Vasant Valley, Malad (E) 7,900, Vasant Pride Thakur Complex, Kandivili (E) 6,000, Silve Bell Off LBS Marg, Mulund(W) 6,200

We are yet to receive more quotations and the same shall be posted as soon as we receive them.