Over the last two quarters, there has been a steady drop in the number of homebuyers in Mumbai. Blame it on builders raising prices, putting them beyond the reach of most buyers.
According to Liases Foras, a real estate research firm, there were approximately 20,500 buyers for new flats in March-June 2009, and only 17,000 in July-October. “We expect a further drop of at least 25 per cent this quarter,” said Pankaj Kapoor, CEO of Liases Foras. “There are buyers, but when prices are fair.”
Among the developers who have raised prices is Neev Builders, which is constructing Ivory Towers at Prabhadevi. It started bookings at Rs 15,000 per square foot in August 2009, but has now hiked prices to Rs 20,000.
Similarly, Nahar Builders started bookings for its Amrit Shakti project at Powai in June 2009 at Rs 5,200 per square foot. Now, it is quoting apartments at Rs 7,000 per square foot.
Builders justified the hike. “All materials — cement, steel, etc — have become very expensive. We have to pass the cost on to buyers to guard our profits,” said Sukhraj Nahar, chairman of the Nahar Group. Jitendra Jain, chairman of the Neev Group, said those buying luxury flats were willing to pay more.
However, analysts were not convinced with the argument. They warned against getting carried away by the spate of bookings after the realty slowdown. “Those were buyers waiting to take advantage of lower prices. They took the plunge during this period. However, the recent hike has dissuaded consumers and forced them out of the market,” said Kapoor.
Homebuyers agreed that Mumbai is now completely unaffordable. Some have even postponed buying a house. “I simply could not find a decent flat for less Rs 50 lakh in Mumbai,” said Mithun Roy, an interior decorator looking for a 700 sq ft house. He now plans to look beyond city limits.
According to Pranab Datta, vice-chairman of Knight Frank, a property consultancy, there simply are no affordable houses in Mumbai anymore. “Apart from the high per-square-foot rates, developers in Mumbai construct large flats, which makes it an even more costly affair,” said Datta.