2012 seems to have brought good news for Mumbai realtors. Home buyers are returning to make purchases despite developers announcing a fresh round of price hikes, reports CNBC-TV18′s Priyanka Ghosh.
Faced with rising input costs on one hand and the new DCR guidelines which have reduced the developable area on a plot of land on the other, real estate companies in Mumbai have begun to increase prices of apartments again.
But what’s probably more interesting is that the hike has not affected demand, with Oberoi clocking in robust volumes of about 36%. This clearly wasn’t the case last year when the company had increased prices by 11% and saw volumes drop by 30%.
Other players such as Sunteck Realty too are confident that its Goregaon project, soft launched at Rs 9,000 per square foot, will be able to fetch about Rs 12,000 per square foot when formally launched in June.
Lodha Developers too have confirmed that the company is looking to increase prices across projects by 3-5%.
So, what has changed in 2012? Analysts say, after an extended downturn, demand is slowly trickling back.
Anuj Puri, country head at Jones Lang LaSalle Meghraj says, “Cycle has started again. Even with the price increase, buyers are coming out and buying. Maybe not to the extent 18 months ago but certainly more than six months back when the prices were about 10-12% cheaper than what they are today.”
However its still not smooth sailing. Experts say only the mid segment buyers are ready to take on price hikes.
“High end is a wait and watch for now but there are locations such as Navi Mumbai and buildings in Thane which have seen appreciation. So like I said we are predicting a 10-11% hike in the mid range and nothing in the high end”, says Shweta Jain from Cushman and Wakefield.
Mumbai has been starved of new launches owing to lack of government approvals in the past one year and some say, this has led to a pent up demand in the market.
So, while the first few launches may receive good response despite an increase in price, whether the demand will be sustainable, will depend on how steeply prices rise in the future.