Real estate prices may fall 20-30% in several pockets of Delhi-NCR and Mumbai in six months, but experts are divided on whether and when prices will decline across the board.
A study by HT of the balance sheets of India’s top 10 listed developers revealed a massive oversupply and a slowdown in sales: they are sitting on an estimated Rs. 31,000 crore worth of unsold properties.
Already, most developers are offering freebies amounting to 5-8% of the property value. And if you bargain really hard, mid-rung developers are offering discounts of 10-15% on a case-by-case basis.
“But real estate firms are not slashing prices (across the board) as they can still access capital from private equity funds or by restructuring loans,” said a real estate analyst.
“Companies are going for high margins compared to high volumes. In the long run, this model is not sustainable,” said Pankaj Kapoor, managing director at real estate consulting firm Liases Foras.
Prices will fall when companies begin to feel the pinch arising from slow sales.
“There is a downward pressure on prices,” added Ambar Maheshwari, managing director of corporate finance at Jones Lang LaSalle India, a leading property consulting firm. “But it’s difficult to say when prices will actually fall.”
Realtors denied a slowdown.
“Developers selling properties in prime areas are seeing sales, especially in completed projects. The sales are not happening in the outskirts and unfinished products,” said Niranjan Hiranandani, head of the Mumbai-based Hiranandani Group, a leading real estate developer.
But industry experts said that specific exceptions apart, the oversupply is for real.