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Mar 09, 2006, 06.03 PM | Source: Moneycontrol.com

Will SC verdict make Mumbai properties cheaper?

The Supreme Court's go-ahead signal for the development of property by Mumbai mill owners made real estate stocks like Indiabulls, Bombay Dyeing, Morarjee Realities, Dawn Mills fly. The stocks were seen zooming up in the range of 5-20%.

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Will SC verdict make Mumbai properties cheaper?

The Supreme Court's go-ahead signal for the development of property by Mumbai mill owners made real estate stocks like Indiabulls, Bombay Dyeing, Morarjee Realities, Dawn Mills fly. The stocks were seen zooming up in the range of 5-20%.

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The Supreme Court's go-ahead signal for the development of property by Mumbai mill owners made real estate stocks like Indiabulls , Bombay Dyeing , Morarjee Realities , Dawn Mills fly. The stocks were seen zooming up in the range of 5-20%.

                                      

SC has set aside the HC judgment and has said that the sale of 25 NTC mills is legal and that the developers can go ahead with construction.

 

SC verdict has given a breather to the real estate developers and the news would have some impact on the Mumbai real estate market as well.

 

How is the real estate story looking now?

 

Experts believe that the news will have some sentimental effect, where the property prices would soften in the short term, but in the long term the impact will be neutral as it takes nearly two years for any construction to come into effect.

 

In the short term, softening of prices is expected because with the clarity on the development of property by Mumbai Mill owners, there will be a demand-supply mismatch.

 

Pradip Chokani, Investment Advisor said "Most of the property prices which have gone up in Mumbai has already factored in the transfer of development right, TDR, now. In the short-term there could be some softening of prices but I don't see much of the effect, either positive or negative, going forward. Once property starts developing there will be too many properties available for investors/users to choose. Looking at what prices has been factored in TDR, the same levels could be maintained going forward."

 

Real estate has gone up roughly around 20% in the last six months across the board.

 

He said, "There will be too much supply of land in Mumbai after this news. But it takes two years for the property to come up. In the long term I don't see prices going up or down much. In the long term there won't be any upside because with the news people will anticipate construction. The prices of properties which have been built and the new buildings, which will come up, will stabilize at same levels. But the difference between construction and under-construction is 10-15% on the minimum side, which will be maintained."

 

Cos which have got Commencement Certificate (sources)

Piramal for Lower Parel Mill

Godrej for Matulya Mill

Mafatlal Mills

Victoria Mills

Hindustan Mill

New GreatEastern

Swan Mill

Ruby Mill

Sandeep Shenoy, Pioneer Intermediaries, says that the outlook for the sector going forward is good, but there could be some downward pressure on price realizations.

 

According to experts, the upsurge which has come today is more of a relief rally. There are two aspects to the development which has come.

 

First, the mill land clearance, which has come to most of the mill owners. The 5 mills, which were sold by NTC, were already given clearance to file their plans with BMC. 

 

Second, NTC can sell all other lands now, so that will result in more supply coming into the market now.

 

Third, most of the 17 private mills,  which were under development, were also stuck because of some misinterpretation. But the point to be noted is that out of these 22 mills (17+5), none can develop because environmental and water supply clearance is yet to be received.

 

Shenoy said, "So out of the 17 mills which had applied, only two have got clearance. Majority of the problems have been sorted out but some problems about environmental clearance is still pending. So I don't think this kind of 20% rally is justified to a large extent.

 

Continued on page 2

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Price when posted: BSE: Rs. 16.53 NSE: Rs. 16.45

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