However, apartment prices have increased significantly over the past year, with prices in the western suburbs rising faster than those in the central suburbs. IIFL’s recent visit to residential projects from prominent developers in suburban Mumbai.
It was found that selling prices are 12-57% higher than the price levels in June 2009. This sharp increase in prices has further hurt affordability, with the average apartment price equivalent to 17 years of average household income in the city.
IIFL expect the drop in transaction volumes over April and May, as reported earlier, to extend into the months ahead. A significant drop in enquiries and instances where developers were willing to offer discounts on the quoted price and accept part payment in cash to reduce total ownership costs through lower registration and stamp-duty charges, was also seen. Inventory monetisation continues to take a back seat with Mumbai developers, who seem to have learned little from the credit crisis. Our top picks remain Unitech and Godrej Properties Suburban Mumbai residential prices up 12-57% since June 2009:
Suburban Mumbai has been the engine for revival in residential transactions in the city, far outweighing demand revival in the island city.
However, apartment prices have increased significantly over the past year, with prices in the western suburbs rising faster than those in the central suburbs. IIFL reckon pressure on transactions will continue in the months ahead: Registration data suggests that the suburban market is cooling off, with transactions down 26% MoM in May after a 9% fall in April. An average apartment in Mumbai suburbs now costs as much as 17 years of average household income.
IIFL saw fewer footfalls from prospective buyers this time compared to three months ago. Some developers were willing to offer 4-5% discounts, while a few others offered to accept a portion of the sale value in cash (without issuing any receipt) to reduce total ownership cost by way of lower registration and stamp-duty charges. HDIL’s projects in western and central suburbs are priced 10-15% lower than those of its competitors, implying a thrust on higher volumes.
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