Residential realty prices moving up

Residential real estate prices are going up. In the last three months, prices of affordable apartments have appreciated by around 10% across the country.

Anshuman Magazine, MD – real estate consultancy firm CB Richard Ellis – South Asia, said, “With improvement in the sentiment in the economy, transactions in the affordable range of residential real estate have gone up. This has made developers to increase prices by 5%-10% in the last three months”.

The developers had cut prices by around 30% in first two quarters of calendar 2009 to revive the demand of residential units, which plummeted to a low due to the global financial crisis. Magazine said the price cut led to some recovery in demand. Enthused by the partial recovery, he said, the developers, who had sold a substantial portion of their projects at hugely discounted prices, decided to increase them marginally in the next phase.

According to a IIFL report, in Mumbai, prices are up 25%-40% from the bottom in early 2009, while in NCR, the corresponding figure is 15-20 %. “Constrained supply and a revival in demand drove up prices in Mumbai, and NCR,” the report said.

In Mumbai, the prices of apartment in Metropolis appreciated by 38% since March to Rs 10,500 per square feet. Similarly, the project, Planet Godrej, has become 20% costlier to Rs 25,000 per sq ft in the last six months. In NCR also, many developers like DLF, Unitech, Jaypee Greens, Mahagun and Amrapali among others, have increased prices by around 10% from the launch prices in March-June.

In the premium segment also, there is revival in demand, said Vibhor Gupta, senior official of Jaypee Greens. However, the prices have not witnessed any escalation in the premium segment. Similar trend has been noticed in cities like Bangalore, Pune and Chennai.

“The current trend of price escalation can not be sustained as it will affect the demand,” said Aditi Vijayakar, ED of Cushman and Wakefiled, adding, as the demand has revived following interest rate cuts by banks, many developers have announced projects in the affordable range. This will increase the supply and will put pressure on the price rise.

At the same time, another consultant said the financial condition of the developers has not improved to a level that they can hold a project for long. They need cash flow to service the debt, which they have taken to buy lands. The source said the money from other sources like dilution of equity is still not easily available. This has forced developers to depend on the sales proceeds to service debt.

One thought on “Residential realty prices moving up

  1. State is doing nothing to control the property prices. I understand price rise to some extend is acceptable but rise 5 times in 3 years is unacceptable but this is reality. When prices go up government smiles, builders laugh but common man cries. Why housing is not part of the necessities in the government’s agenda. If food can education can why cant the housing. Why government want our 50% people live in slums when it can provide good housing by properly controlling this sector. Why there is no effective regulatory body in this sector like we have IRDA or TRAI. Why petrol prices are controlled, food prices are controlled but no control on the property prices. Property owners become greedy day by day and this price rise is paralyzing the whole system. One generation bought a house in a good locality which was on the outskirts of the city sometime back. The next generation sales the same house at 10 times of rate and earns bread and butter for the rest of whole life, shifts to another outskirts of the city. Now the same man could have earned his bread and butter by doing something constructive for the country but what he did, he earned everything for the whole life by doing nothing. So this way we can say the price rise is making people lubber/lazy and this is very dangerous for the country. Another problem with price rise at this rate is causing corruption in the society because common man will indulge in it to fulfill his basic necessities. Rich remains rich and poor remains poor the truth of current Indian society. I think there has to be some law that prevents wealth transition from one generation to another this will enforce people to work more and this is the need of present day.

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