The real estate market in Mumbai looks poised for some upswing after going through a lukewarm phase for the past few months. Evidently, there has been a marked increase in sales in March 2012 when 5,776 properties were registered, which is 37% more than the 3,639 registrations in the month of February 2012.
Similarly, at least 50 projects have been launched in the last three months, which further underlines the positive sentiment in the real estate market. The developers ‘ fraternity is quite upbeat about this encouraging development in the past few months.
Says Bharat Mody, CFO, Hubtown Limited, “The recent registration data is certainly encouraging and we are hopeful of numbers getting better from here on.” Similarly, Diipesh Bhagtani, Executive Director, Jaycee Homes Ltd, says: “It’s always good news when we see higher number of registrations and project launches.” Developers, however, have their own reasoning for this positive trend witnessed in the real estate market. The festive spell in the month of March has also been instrumental in giving a boost to the sales in the residential space, observe developers.
Shailesh Sanghvi – Director of Sanghvi Group of Companies, says: “Auspicious occasions such as Gudi Padwa, Akshya Tritya and Dhanteras give an impetus to booking of flats. As Gudi Padwa fell in the month of March, this worked as a major driver for property registrations.
With several developers attracting homebuyers with significant discounts and incentives the trend will continue to prevail since it is the most favourable day to purchase the flat or to perform their Graha Pravesh puja.
On this festive occasion there is an affirmative sentiment in people and more prospects are keen to buy, a discount offer helps them to take the decision faster, releasing some monetary burden.” In addition to this, bonus and healthy job market have certainly created an optimistic sentiment in the market, he points out. However, according to Mody, this improvement has mostly come from the re-sale property rather than any fresh purchases. “Therefore, things will significantly change only if situation on pending approvals improves drastically. That will create fresh supply in the market and ease the upward pressure on prices and will prove to be win-win for government, home-buyers and developers,” he says.
Additionally, developers aver that the primary reason is that the new Development Control Rules (DCR) that came into effect in January has been instrumental in boosting the sales. The recent bunching up of project launches after the new DCR came into effect in January 2012 seems to have driven the recovery, observe realty experts. “Developers and customers are now certain of what they are buying and investing into. Also, we have made it mandatory for developers to sell flats on carpet pricing, leaving no dispute on clarity of areas.”
Moreover, with the Reserve Bank of India (RBI) cutting interest rates for the first time in three years after raising borrowing costs by record 375 basis points in 13 moves from mid-March 2010, this factor has also been responsible for the spike in purchases. The RBI lowered the repurchase rate to 8 per cent from 8.5 per cent on April 17. Incidentally, Mumbai’s residential home sales recovered from a three-year low in the quarter ended in March.