Realty scenario in Mumbai City - May '08

The realty prices in Mumbai which since past two years nearly touched the skies, is now showing signs of waning. However, a full blown correction does not seem to be on the cards. The current real estate scenario April - May 2008, if one were to make an impartial assessment is that prices of flats will be sluggish and will remain so for the next six months.Some contradict this viewpoint like Rajesh Mehta, a leading property consultant in Mumbai, who predicts "April and May are the key months as far as property deals go. If transactions do not pick up, prices of apartments will fall at least 10 to 15 per cent" (source blog.Indiaproperties.com)

While it is true that there has been more then 50% fall in sale of residential flats, but due to the 'iron hold' of the powerful builder's cartel, chances are prices won't fall. In fact, after hearing about prospective buyers postponing buying of flats in anticipation of fall in prices of flats, leading city developers called a meeting, discussed the scenario for the next few months and then coming to a consensus, jointly decided not to lower home prices until Diwali (Source TOI - http://www.propertybytes.com/)

There is another strong reason why the Mumbai builders are thwarting any attempt at lowering prices of flats and are not willing to sell their flat for less then 10K per sq ft. As of now lacs of buildings are going in for redevelopment, which means existing old buildings are demolished and reconstructed with additional flats being build. The builders have corpus funds out of which they are offering the old owner's attractive amounts plus life time maintenance, two years rentals with modern amenities thrown in. Subsequently their cost price for sale of the remaining flats too has gone up, thereby leaving them in no position to reduce the prices.

In the long run, if the government did on it's part, try to rein in flat prices, by cutting down TDR rates, stamp duty, registration and other charges then there is a possibility of these rebates being passed on to the beleaguered city buyers. But the moot point is … Will the government take such a bold step. Well, we'll have to wait and watch.