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Home / News / India /  Realty prices down in Mumbai as developers try to offload inventory

Real estate developers in the Mumbai Metropolitan Region (MMR) are offering 10-15% discounts on new launches, hinting at falling realty prices in some of India’s most expensive neighbourhoods.

Developers are keen to reduce home inventory levels, which are at historically high levels, to increase cash flows during the pandemic, according to brokers and real estate consultants.

“Developers are reducing prices dramatically and I have seen prices drop on new flats by almost 20%," said Vishal Kadrekar, proprietor of Fair Value Property, which operates in and around Parel, Prabhadevi, and Worli. “Prices have risen very high over the years in MMR. There are projects that were launched in 1-2 years ago that still haven’t been sold. A premium 3-bedroom home in an under-construction project in Lower Parel cost over 9 crore a few years ago; now it’s dropped to 7.25 crore levels. In another premium apartment next to ITC Grand Central, the price has fallen from 47,000 per sq. ft two years ago to 38-40,000 now."

Unsold inventory across six top cities rose to more than 19 quarters at the end of the first six months of FY21, with MMR and Chennai reporting the most unsold stock, according to Liases Foras real estate market data.

Developers are wary of launching new projects because of the oversupply. MMR witnessed new supply of only 7,890 new units in April-September, compared to nearly 37,100 units in the year-ago, said Anuj Puri, chairman, Anarock Property Consultants. MMR includes Mumbai, Navi Mumbai, Thane, and parts of Palghar and Raigad districts. Developers have not officially reduced prices of properties but have not increased it over a period and are doling out offers in varied forms, which reduces the overall cost of a property, Puri said.

Developers have been showering offers such as lower booking amount and a full refund on cancellation, to woo homebuyers and register higher monthly sales. This follows a lowering of stamp duty for property registration in Maharashtra from 5% to 2% till December and to 3% for the January-March 2021 period.

“Fuelled by stamp duty cuts offered by the Maharashtra government and other advantages available to buyers, such as festive offers and discounts, many developers, including top-tier ones, have launched new projects in the past 3-4 months spanning suburbs and peripheral areas of Mumbai," said Bhavin Thakker, managing director, Mumbai, and head, cross-border tenant advisory, Savills India. “Some direct discounts are offered. There are also several indirect reductions in prices or benefits offered to buyers," Thakker said.

“We haven’t reduced prices but there are people shopping for discounts," Ram Raheja, Director, S Raheja Realty, told Mint, making the case for a real estate investment even when many industry analysts have downgraded the sector. “The stamp duty cut, the low home loan rates, fall in gold prices, all of these factors have made real estate a stable and strong investment and we’re seeing fence-sitters convert into buyers. The price correction differs from developer to developer, their cash and liquidity requirements, and from one buyer to another. At the plinth stage today we’ve sold almost 40% of a redevelopment project in Bandra-Khar at the prices we expected."

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