Mumbai Real Estate: Weakness in lease registrations sets in
Prabhudas Lilladher has come out with its report on Mumbai real estate. According to the research firm, weakness in commercial real estate results in sharp decline in lease registrations.
- Pre-festive season slackness seep into real estate registrations
- Sales registrations slipping below the 5000 mark for second consecutive month
- No near-term respite in the absence of a fiscal consolidation program
- Weakness in commercial real estate result in sharp decline in lease registrations
Challenges remain despite volume stabilization:
The 5000+ mark for sales registrations, which was held up for the March-May period, had given way in June and is further slipping with another 2% decline witnessed in the month of July. The pent-up demand which was witnessed earlier seems to be subsiding once again, given the slack period prior to the festive season.
The trailing 3-month registration chart, which had witnessed a slight break in the falling trend, has once again embarked on its descending journey.
In this scenario of high interest rates and inflationary pressures without a strong fiscal consolidation program on part of the government, we do not expect a nearterm respite for the sector. With developers sitting on highly leveraged balance sheets, a price cut becomes inevitable. We believe that the challenges to the sales scenario in the city continue to remain high and the stressed affordability equation needs to be corrected by a number of factors amid high property prices. Thus, we maintain our cautious stance on the city’s realty scenario.
Lease registrations, which have been clocking new highs for the last several months, have been severely impacted with a slowdown in commercial real estate. Lease registrations for the month of July were down 17% on a MoM basis.
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To read the full report click on the attachment