Mumbai, Delhi seeing return of buyer in mid-income seg
Anuj Puri, Chairman & Country Head, Jones Lang LaSalle India
After the steep rise in Mumbai's property prices during the 2008 boom, the economic slowdown in 2009 weakened this market considerably. Prices fell sharply, stabilized by the middle of year and rose again between the Q3 and Q4. In fact, Mumbai's property prices rose by 30-60% in 2010.
Due to a melange of market factors that led to decreased demand, Mumbai's residential property prices are today back at the 2008 levels. Technically, this can be viewed as a correction. Most of the city's builders are now in need of funding and their power to hold on to their old rates has been compromised. Residential property rates have declined in areas like Parel, Lower Parel, Mahalaxmi, East Bandra, East Andheri East, East Goregaon, Mulund and Kurla. However, many other areas within Mumbai and Thane district have not seen serious declines because both the demand/supply and pricing dynamics are different there.
Overall, we are looking at a possible oversupply scenario in Mumbai, which could make itself most felt by next year.
In the Delhi NCR region, there was a lot of activity in terms of sales and price rises on the residential property market during 2009-’10. However, this market effervescence has now reduced and demand is beginning to slow down visibly in many areas. We expect that a market correction in residential prices is due to take place in the NCR region. The magnitude of the correction would conservatively be between 5-10%, depending on exact areas and the path the market has been taking there.
In both Mumbai and Delhi NCR, we are undoubtedly seeing a gradual return of a buyer's market in the mid-income property segment. The luxury homes market is more resilient, since its patrons are more insulated against economic vagaries, but the market is witnessing a discernible sales slowdown even in this segment.