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Mumbai's Property Values - A Chance to Save Money

Harboring dreams of buying properties in Mumbai? Well, if you've been doing so, the financial capital of India has better news for you. Mumbai, like it's colonial cousins London and New York, has not fallen prey to corrections in real estate prices around the world. Despite the fact that there is now a massive stock of property, a slow-down in the overall demand in the market and a decline in the financial health of most property developers, prices for property in Mumbai have not fallen. However, recent reports by property experts such as Knight Frank have pointed towards a marginal softening of prices in the Mumbai real estate market.

Down Is Good

For the past four quarters, prices have been fluctuating across a narrow range but the fluctuation has been with predominantly negative shift. The real market is making space and adjusting for newer launches such as new residential properties in Borivali. According to the report by Knight Frank, 'As prices in premium micro-markets tend to be much more volatile compared to the peripheral suburban micro-markets, prices in some South and Central Mumbai locations like Parel, Lower Parel and Mahalaxmi, have declined close to 10% over the previous three quarters while prices in Navi Mumbai, Thane and the peripheral suburbs of Central & Western Mumbai have either been stable.'

Pujit Agarwal, Head of the Orbit Corp. agrees with the reports to an extent. He says that though there has been a correction in the market by almost 20 percent, especially around Central Mumbai, there are places in South Mumbai which have hardly seen a shift in property values. Granted, there has not been any rise either, the market remains 'sluggish' at best. Navi Mumbai is one of the few places which has seen a slight increase in property values. However, Mr. Agarwal also states that, 'as far as the MMR (Mumbai Metropolitan Region) region is concerned, far flung suburbs including Thane, Kalyan and Dombivili have seen an appreciation of 10-15% and that continues to grow.'

The country head of Jones Lang Lesalle India, Anuj Puri makes another interesting point, he states that completed properties or resale flats have also witnessed an increase although across the market, there has been a 10 to 15 percent decrease in the value of properties which are yet to be constructed. This is good news for those who are looking to invest in new residential properties coming up in Borivali and Navi Mumbai, as those properties will see an immediate increase post the completion of construction.

Of course, some may view such a decrease to barely effect the market or the buyer's outlook, given that rates in Mumbai are already very high. However, there are still plenty of discounts being provided in order to make the market a truly competitive place with developers offering discounts of almost 15 percent through free stamp duties and registration, waivers of floor charges and parking charges. For those in the market for luxury and premium housing units, there are discounts as high as 25 percent available.

Reasons For the Decline

The reason developers in the country's financial capital are giving such discounts is because out of the 3 lakh residential units being constructed in Mumbai, almost half of them remain unsold. Thus, the total percentage of unsold 'stock' of property in Mumbai has gone up to almost 45 percent. The NCR (New Delhi & its satellites) have an unsold stock of around 26 percent.

Demand has also been on the downturn in addition to the rising number of cancellations over the recent quarters.

Should Buyer's Invest?

Experts say waiting a little bit would not be wrong, especially for those looking to purchase properties in Central Mumbai. There may be a further or sharper decline over the coming months which may help a lot of mid range consumers to save money on property.

Builders have had to deal with their stock of property increasing while their demand has perceptibly decreased. As the builders face rising interests and reduced profits, experts such as Knight Frank believe that they will look to offload their stock, even if it means selling at a lower rate.

However, there are also a few observers such as Anuj Puri who state that the elections may result in property prices going up or down, depending upon public sentiment. In such cases, it would be best to avoid the volatility of a post election market and make decisions now.

Bio:

Neel Carvalho is a freelance writer who focuses on the trends in properties in the Sub-Continent. Neel has been a keen observer of the market for almost two decades and here, he writes about the profitability of purchasing new residential properties in Borivali and Parel along with the reasons for which Mumbai's property values have corrected themselves. Write to him for any further queries that you may have.

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