Wednesday, June 20, 2007

Has the bubble burst in Mumbai ??

Due to cheap availablilty of land, the number of high paying jobs grew in cities like Bangalore, Pune, Hyderabad and Chennai. In these cities one can find a decent apartment for 3k a sq/ft. In Mumbai the corresponding price would be 9k. The Mumbai boom was fueled by cheap credit and black money. End user demand was priced out even at the onset of the boom, when prices were 4k+, which was due to lack of supply. Now with supply outstripping demand several times over, It wont be long before Mumbai prices find their floor at 3-4k a sq/ft. Most builders will sell at the best price they get since they know, the situation could only get worse. Its best for buyers to quote 40% of the value and see if the seller blinks. This market can crash, faster then it went up

Mumbai: The buildings in Mumbai may be soaring higher each passing day, but the property sales charts in the city are experiencing a slump.

Developers are now bending over backwards to make that sale, and are ready to offer huge discounts freebies such as free parking space and stamp duty payments have become commonplace.

In suburbs such as Andheri, Goregaon and Malad builders often offer a 10 to 15 per cent discount on bulk deals. Those discounts could reach 30 or 40 per cent if it will them clinch the deal.

“A builder might quote Rs 10,000 per square foot. But if you sit across the table with money in hand, he will reduce his price by 30 to 40 per cent.” says Bastvi Estates Agent, Rashid Bastvi

Because the sales have fallen, the rate in some cases rates have gone down by 90 percent in the past six months

“In my opinion, overall sales have gone down by 60 to 70 per cent, also in the second-hand property market, sales are down by almost 80 to 90 per cent,” President of Estate Agents Association of India, Yashwant dalal says.

The sales slowdown is playing heavy on the psychology of the developers. Even A-grade developers are now calling on brokers with a hope to turn the sales graphs up. But there is no reason for the common man to get worried, as it is the ideal time to cash in on this real estate market slump.

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