MCHI realty fair a flop; Mumbai vol sales may dip 10-20%

Moneycontrol Bureau

Brokerage house Religare sees realty sales (volumes) in Mumbai falling 10-20 percent due to unaffordable prices. It said that the recently concluded MCHI (Maharashtra Chamber of Housing Industry) property exhibition held in the city saw a tepid response from prospective buyers.

"Weak affordability remains the key concern for near-term volumes and a revival hinges upon income growth or a decline in property prices. We see limited scope for either of these and hence expect volumes to dip (around 10-20%) in Mumbai," said the Religare report.

The brokerage said that the 3-5 percent discount being offered by some developers at the exhibition was not good enough to tempt buyers.

"We believe there is some moderation in property price growth (around 10-15 percent year-on-year) vis-à-vis last year (around 20-40 percent). However, given the low visibility on income growth, a moderation in price growth may not be enough to improve volumes," the report said.

Another issue plaguing the sector is the red-tape involved in the various regulatory clearances. This has neutralized the benefits arising out of increased supply of residential properties due to change in Development Control Regulations (DCR), the report said.