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Mumbai: Reduction of property prices is still debatable

There has been massive disagreement of opinions with respect to possible lowering of property prices in Mumbai. As per Hindustan Times, since there is nearly over 1,00,000 unsold apartments of various sizes amounting to over Rs. 1,00,000 Crores in the Mumbai Metropolitan Region and an unsold inventory of a similar amount covering an area of approximately 194 million sq. ft. in NCR, there is a possibility that developers might reduce prices. As per a quotation given by Niranjan Hiranandani, the Managing Director of Hiranandani Group, only selected projects in selected locations of NCR and Mumbai are going to witness such a downfall. In an year-on-year basis, Mumbai property registrations have dropped by 25%. On 3 December 2012, an official statement was released by the Confederation of Real Estate Developers Association of India (CREDAI) urging over 8,000 developer members to consider revising rates to maximize sales.

 

The reasons why most developers would still refrain from taking such measures is that rate reduction would not be profitable for them or make up for the increased interest rates, land costs as well as increased raw material costs.

 

However, Keki Mistry, Vice Chairman and Chief Executive of HDFC is harping a different tune, particularly with respect to realty situation in Mumbai. According to him there is an inherent demand for real estate in Mumbai and it is unlikely that property prices in the metropolis are likely to fall as there is robust demand there. When asked to comment about unsold inventories by Business Today, he emphasized that as per his opinion, there is not excess supply but increasing demand.

 

As per Favista experts, due to significant immigration in Mumbai, there are a lot of people who need living spaces in Mumbai. And considering that there is going to be further demand, the supply of considerable inventories is necessary. Although there might be ample unsold inventories currently, these will exhaust in the near future, given the rise in demand. And so, it is unlikely that there will be significant fall of property prices, particularly in MMR.

 

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