Mumbai realty bites: registrations at new low again

Prabhudas Lilladher has come out with its report on Mumbai realty.

• Sales registrations down 25% YoY at 4,611
• Registrations at a new low again (lowest in 27 months)
• RBI hikes rates again by 25 bps; hawkish stance dims hopes of any respite in the form of lower interest rates anytime soon
• Lease registrations down 16% MoM at 8,102; however, up marginally (4%) YoY

Sales registrations down 25% YoY, at a new low again:
Sales registrations in the month of August 2011 are at a new low again, down 25% YoY to 4611. Representing the sales of the May-June period, the sales registrations data of August continues to reaffirm the downtrend in sales volumes the city has been witnessing for the last one year now. 

RBI has hiked the repo rate by another 25bps this month, whilst maintaining its hawkish monetary policy stance. RBI has stated inflation control as its number one priority and a change in policy stance would be driven by reversal in inflation trajectory. Although we might be nearing the end of the rate hike cycle, a cut in policy rates would only happen once inflation comes off substantially from the current levels, which is probably some time away, given recent inflationary trends. Thus, we believe, that worsened buyer affordability on account of higher interest rates will continue for a while. Also, as the second part of the affordability equation, i.e. property prices, continues to defy gravity, there seems to be no respite in sight for the buyer. Sales trends are likely to worsen further in the absence of a favourable change in the buyer affordability dynamic, going forward.

The builder community has pinned hopes on the upcoming festive season to revive fledgling sales. Builder strategies, in terms of freebies/ discounts offered for the festive season, would be a key to watch out for. 

Lease registrations for the month of August are down 16% on a MoM basis; however, up marginally by 4% on a YoY basis to 8,102. Although, lease registrations have shown a sharp dip this month, we would need to see data in the months ahead to see if this is a reversal of the upward trend or just a monthly blip.

FIIs holding more than 30% in Indian cos

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