Mumbai registered abysmal sales in the June quarter, while deals in Pune surged. Pankaj Kapoor, managing director, Liases Foras, says prices have skyrocketed when they should have corrected over the past few months, and this is not sustainable
Mumbai lags way behind other realty hotspots in terms of residential sales. According to Pankaj Kapoor, managing director of realty research firm Liases Foras, only 8.17 million square feet was sold in the city in the April-June quarter this year, against an inventory of 116 million sq ft. But cities like Pune and Hyderabad fared much better.
"Pune recorded sales of 9.47 million sq ft from an inventory of a mere 48 million sq ft, whereas the Mumbai Metropolitan Region (MMR) recorded sales of 8.17 million sq ft against an inventory of 116 million sq ft, which indicates that Pune is a better market than the MMR," Mr Kapoor said.
Mr Kapoor was addressing a well-attended workshop on 'Will real estate prices fall further?' hosted by Moneylife Foundation on Saturday.
In the National Capital Region (NCR) 22.04 million sq ft was sold against an inventory of 224 million sq ft. Mumbai has seen a continuous increase in inventory over the past two years with sales dipping by 10% q-o-q. Average monthly sales between April and June were 2.7 million sq ft.
On the other hand, Mumbai's velocity rate—the pace of property off-take—is the lowest among the metros. The current velocity rate in Mumbai is 1.39%, while for NCR it is 1.76%. Pune is best at 3.01%. "This means that while in Pune it will take only 12 months to offload the inventory, Mumbai will need 40 months," Mr Kapoor said.
Mumbai is also the costliest city to live in. The average price per square feet is Rs9,716, while for Pune and NCR it is Rs3,587 and Rs3,131 respectively. On average a Mumbai flat costs almost Rs98 lakh, way above the price for all other metros, though the area is much smaller.
Sales velocity, Mr Kapoor demonstrated, peaked in June 2009, when the recession resulted in prices going down. However, after that, velocity steadily decreased as prices went up.
In terms of value, Mumbai sales saw a receipt of Rs2,802 crore, while the value of sales was Rs5,046 crore. Delhi NCR's receipts were Rs1,680 crore against a sales value of Rs6,850 crore. Pune, however, beat Delhi with Rs1,798 crore in receipts against sales value of Rs3,381 crore. "We have seen that inventory keeps on piling up. In Mumbai, it has increased 22% year-on-year," Mr Kapoor said. "However, the amount in receipts has steadily gone down. March quarter receipts amounted to Rs3,117 crore."
"This indicates that at current prices, there is no off-take," said Mr Kapoor. "The correction should have come, but prices have skyrocketed instead. The market is becoming more lopsided, and it is hardly a sustainable model."
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Liases Foras founder
Reliance and Siemens will combine to leverage the 4G network for the low latency and assured quality of service required for video and security applications
Reliance Security Solutions Ltd, a subsidiary of Reliance Industries Ltd, and Siemens Ltd have signed a Memorandum of Understanding to jointly develop homeland security solutions for cities and highways in India.
The Indian security market is expected to be one of the largest growing markets in the world over the next decade and this initiative will result in India joining a select set of advanced nations which are beginning to use 4G wireless networks for law enforcement purposes.
With pan-India broadband wireless access spectrum, Reliance plans to offer fourth generation (4G) wireless networking services for safety and other advanced applications. Reliance and Siemens will combine to leverage the 4G network for the low latency and assured quality of service (QoS) required for video and security applications.
NMDC is the only company permitted to mine iron ore from Karnataka by the apex court
State-owned NMDC has ramped up iron ore production from Karnataka up to 30,000 tonnes per day to meet the shortage faced by iron and steel making units in Southern India, a senior company official said.
"At present, we are producing in the range of 28,000 to 30,000 tonnes a day. We can increase it to 35,000 tonnes per day but the rains are playing spoilsport," NMDC director (finance) S Thiagarajan told PTI.
NMDC is the only company permitted to mine iron ore from Karnataka by the apex court, which imposed a ban on mining in the state due to large-scale environmental degradation of the mining areas.
The apex court had allowed the Navratna firm to mine one million tonnes (MT) of iron ore per month (or 12 MT in a year) from the state, which translated to about 33,500-34,000 tonnes of ore per day.
"It will take us a week's time to ramp it up to the desired level once rains in the region stop," Thiagrajan said.
The move, together with e-auction of iron ore stocks in the state, is expected to ease the demand of vital steel making raw material in the state, he added.
"What we produce may not be sufficient as the demand is much more than our production. So, the auctions will ease the situation."
According an estimate of Bangalore Chamber of Industry and Commerce (BCIC), daily demand of Karnataka's iron and steel units is about 1,04,000 tonnes and many units have closed their operations due to paucity of the ore.
The apex court, while banning the mining in state, had permitted to auction 1.5 million tonnes (MT) iron ore per month through e-auction route from the stock of 25.88 MT, lying at the mines in the state.
The first round of auction was conducted on 14th September for about 4,00,000 tonnes. When asked about the supplies, Thiagarajan said that about 35% of iron ore production from the state is being supplied to sponge and pig iron units of Karnataka and other neighbouring states.
"We have kept almost our entire production of high grade iron ore (lumps), accounting for about 35% of total production, for smaller units, who are mainly sponge and pig iron units in Karnataka, Goa, Andhra Pradesh and Tamil Nadu," the NMDC director finance said.
He further said that supply of iron ore has been decided as per the requirements of industry and the demand is being met in smaller quantities.
On Monday, NMDC ended 0.88% down at Rs247.20 on the Bombay Stock Exchange, while the benchmark Sensex declined 1.11% to 16,745.35.