No major correction seen in 2013 in Mumbai realty pricing

Moneycontrol Bureau
 
This pins hopes for those who have so far held up their house buying plans in anticipation of probable price corrections. The new year - 2013 will not see any major fall in Mumbai residential real estate market, predicts the real estate consultancy firm Jones Lang LaSalle India. Thanks to the rising demand for homes that refuses to dwindle.

"Given the increased demand, the high prices of land and the significant increase in construction costs, 2013 will not bring any major correction," said Ramesh Nair, managing director - West, Jones Lang LaSalle India in a note released on Monday.

"Though the question of what the State Government will do in terms of providing the infrastructure required to support the increasing population, the inherent demand for residential space in Mumbai will remain strong in 2013. With better clarity on the new DCR regulations, 2013 will see more projects launch on schedule, with an implied assurance that developers will focus on meeting the the committed timelines."

In an effort to enhance transparency in property transactions, the state government of Maharashtra had amended the Development Control Regulations (DCR) in February - 2012. Accordingly spaces such as balconies, flower beds and terraces are now a part of the floor space index or FSI and realtors have to pay a premium for these areas.

In 2012, the Mumbai residential market showed signs of revival after nearly 18 months of sluggishness on the back of increase in demand and steady pricing. The best-performing submarkets, according to the report, were Parel, Wadala, Dadar East, Sewri, Chembur and Tilak Nagar.
 
"Generally, 2012 saw a significant increase in absorption over 2011 in these markets, in which capital values grew in the range of 9–10% y-o-y during the year. The increased demand for residential units came from robust commercial office market activity in south central Mumbai. Also, these sub-markets benefited from more attractive pricing when compared to premium addresses of South Mumbai," Nair noted.
 
For upmarket areas like Colaba, Cuffe Parade, Worli and others, the absorption rate in 2012 did not match the rate of 2011. Absorption was 10-15% below 2011 levels, although capital values rose in the range of 3-4%.
"The anticipated price correction did not materialize in these locations, which saw a moderate number of new launches when compared to South Central Mumbai. South Central Mumbai continued to benefit from competitive pricing and its location advantage," Nair said.