Real estate prices for new bookings in Mumbai and NCR Delhi are expected to be 10 to 20 per cent lower than prevailing market rates feel analysts as developers are still bogged down by unsold inventory in projects in these areas.
Though absorption of unsold flats have gone up in the last six months due to recovery in the economy and over all sentiment, sky rocketing realty prices could jeopardise the euphoria, warn experts.
“Property prices in India have risen by 25 to 50 per cent from their previous lows and have breached their 2007–08 peaks in Mumbai and Delhi, leading to potential policy risks. We expect new launches in Mumbai and Delhi to be at prices lower than current rates,” Religare Capital Markets has said in a research report.
“It is true that the craze for affordable housing is over as other segments have picked up,” said Anuj Puri, chairman, Jones Lang LaSalle Meghraj. “Any further rise in prices would kill demand and developers must be aware of consequences.”
In Virar prices for new launches are likely to come down to Rs 2,200 from the existing Rs 2,800, in Panvel from Rs 5,000 a sq ft to Rs 4,000 for new launches and Andheri West to Rs 7,500 per sq ft from Rs 11,000 in existing project — perhaps the sharpest cut — according to the Religare report.
Developers say that there is nothing unusual about price cuts for new projects.
“As a company policy we sell the first 20 per cent of the apartments at cheaper rates and as we go on constructing prices go up,” said Hemant Shah, CMD, Akruti City, a Mumbai-based realty company. “Otherwise we may have to pay out heavy interests to banks for borrowed funds.”