As real estate goes through a tough phase, developers have pulled yet another trick to increase cash flows without causing losses to speculators —commercial project prices have been slashed by around 15% in the past two months.
For instance, in a project by a Mumbai-based realty player in the Bandra Kurla Complex — an important industrial hub — the price was slashed to Rs. 26,500 from Rs. 30,000 per sq ft.
“The supply in Mumbai and NCR is more than the demand. So, the newer commercial or retail projects are launched at a lower price. Again, prices are easier to slash in commercial projects as there are fewer investors than in residential projects,” said an executive working with a developer.
Industry experts say that vacancies in commercial properties have gone up to 20% in Mumbai and NCR.
“Banks, private equity funds and NBFCs are more reluctant than ever before to fund speculative commercial construction,” said Ramesh Nair, MD, west, Jones Lang LaSalle, India.
“Residential property prices in Mumbai are significantly higher than commercial space rates as residential projects are funded by buyers, while commercial developers have to wait till building completion to get cash inflows thereby reducing cost of funding for developers for residential,”he added.
“In new commercial plots we have seen around a 12% fall in price in the last 30-60 days,” said Ravi Ahuja, executive director, Cushman & Wakefield , India.