During the past two quarters, property prices were being jacked up by various builders across the metropolis. However, customers are not biting, and realty prices may be in for a correction in the months ahead
Finally, prospective homebuyers can heave a sigh of relief. In the second quarter, property prices in Mumbai have stagnated - and in some cases, they have even come down, according to a report from property consultancy firm Knight Frank.
This is in sharp contrast to the previous two quarters where property prices in Mumbai had seen steep hikes as developers were trying to tap into what they perceived to be dormant pent-up demand during the worldwide recession.
According to the data provided by the consultancy firm, property price appreciation was seen in only a few micro-markets in Mumbai. The maximum appreciation was in Goregaon (a western suburb), where prices increased by 6%. Both Goregaon (East) and (West) saw an increase of Rs500 per square feet in the second quarter compared to the first quarter. Locations in prime areas in south Mumbai - such as Walkeshwar and Malabar Hills - saw a slight increase of only 4%-5% in prices (of about Rs2,500 square feet) during the same period.
Besides, there wasn't any price appreciation seen in the central suburbs and the satellite city of Navi Mumbai, considered to be some of the fastest-growing zones in and around Mumbai.
In Malad, considered to be a prime western suburb, the prices of property have declined by 9% (or Rs750/sq ft to Rs7,500/sq ft).
The report attributes the stagnation in Mumbai real-estate prices to flagging demand from consumers due to the abnormal rates that were being charged by builders. "Consumers have made it clear that they will not pay over the odds for apartments and consequently developers have been coerced to stop rapidly escalating property prices in Mumbai," said the report.
A real estate expert, preferring anonymity, told Moneylife that real-estate prices being quoted do not actually reflect the true picture. He said, "There is demand, but the price the builder is quoting is not matching with the purchasing capacity of buyers. Besides, builders are not selling property at the prices which they are quoting. They are selling at discounted prices behind closed doors. Also, the funds the builders have been able to generate from multiple sources have enabled them to hold prices high, which is (again not) sustainable."
What's more, builders are coming up with lucrative schemes to push sales in the residential segment. Among their tactics is making a '10:90' offer (see: http://www.moneylife.in/article/4/10186.html).
Earlier, the real-estate market experienced an alarming rise of about 30% in certain Mumbai micro-markets during the first quarter of this year, resulting in a decline in sales by 50%-60% (see: http://www.moneylife.in/article/4/8844.html).
Besides, the Knight Frank report says, "Similar to 1Q 2010, 2Q 2010 saw a fairly low number of inquiries and transactions in the Mumbai micro-markets. While there were some large transactions, the overall volume of transactions decreased further during this quarter. However, there were a few noteworthy projects that were launched in 2Q 2010."
The real-estate market focussed more on higher valuations and raising funds through the capital market than on end-user sales, according to Pankaj Kapoor, founder and managing director, Liases Foras, a real-estate rating and research company.
However, according to the report from Knight Frank, not many real-estate companies have gone ahead with their plans of venturing into the capital markets because the performance of the listed companies discouraged them from doing so. The returns generated by the stocks after listing have been below investor expectations, the report said.
In terms of rental values, there has been no price appreciation noted in the second quarter compared to the first quarter of 2010.
It remains to be seen if prices will come down even more from the current astronomical levels so that prospective customers will finally be able to afford a place in the metropolis - and beyond.
Coimbatore: The Tirupur Exporters' Association (TEA) today requested prime minister Manmohan Singh to immediately intervene and postpone cotton exports to 15th January and ban cotton yarn exports, to ensure its availability in the domestic market, reports PTI.
In a letter to Mr Singh, TEA president, A Sakthivel said the knitwear export sector was facing an alarming situation, which would even lead to the closure of export units after Diwali, as no one is able to cope with the ever increasing price pressure of cotton yarn, the main raw material.
The cotton price in the domestic market was skyrocketing on a daily basis because of the government permission granted for export of 55 lakh cotton bales from November. It was a fact that the real beneficiaries were traders and MNCs and not the cotton farmer nor the user industry, he claimed.
Requesting the prime minister to allow cotton export only after 15th January, that too in a calibrated manner, TEA also urged him to bring cotton under the Essential Commodities Act.
Mr Sakthivel also said cotton procurement should be done on Actual User Condition basis to avoid speculation and hoarding.
Copies of the letter were sent to union finance minister Pranab Mukherjee, textile minister Dayanidhi Maran, commerce and industry minister Anand Sharma and his deputy Jyotiraditya Scindia, Tamil Nadu chief minister M Karunanidhi and deputy chief minister M K Stalin.
New Delhi: Looking to scale up sourcing of agricultural products from India, the world's largest retailer Wal-Mart Stores Inc today said its joint venture (JV) with the Bharti Group here will rope in 35,000 farmers by 2015 to its supply chain, reports PTI.
"We are already making a contribution to India's agricultural sector by working with a large number of farmers in Punjab. I am pleased to announce that Bharti Wal-Mart would be directly sourcing from 35,000 small and medium farmers by 2015," Wal-Mart Stores Inc president and CEO Mike T Duke said here at a function organised by the Federation of Indian Chambers of Commerce and Industry (Ficci).
At present, the 50:50 cash and carry joint venture, Bharti Wal-Mart, works with 550 farmers in the country.
Elaborating on how the company aims to help the farmers, Mr Duke said: "We will help them by providing skills and technology for crop management...By doing all these we hope that the farmers will see at least a 20% increase in their income levels."
He said the company will also be training the farmers on how to utilise usage of water and fertilisers optimally.
"This will benefit one million farmer and farm workers," Mr Duke added.
Commenting on the need for skill upgradation in the retail sector, Mr Duke said the JV will add a third skills training centre in Bangalore in a couple of months.
Bharti Enterprises vice chairman and managing director Rajan Bharti Mittal said, after the Bangalore centre, another skill centre would be set up at Mohali but did not give a timeline for it.
The Bharti Wal-Mart association currently has two training centres located in Amritsar and Delhi in partnership with the respective state governments.
"The target is to train 40,000 students in the next five years and place at least 15,000 students in the next five years," Mr Duke said.
Already 3,400 students have already been certified and 1,100 people have been place in jobs, he added.
Commenting on the need for further opening up of India's retail sector to FDI, Mr Duke said: "We want to open more and more stores here and contribute in the training and we do stand ready to contribute much more than what we are doing right now if FDI is opened in retail."
He said Wal-Mart has been encouraged by the government's positive approach, specially the Department of Industrial Policy and Promotion (DIPP) paper that came out in June this year.
An inter-ministerial committee is currently evaluating the comments of stakeholders on the paper on opening up the politically-sensitive multi-brand retail sector to foreign direct investment (FDI).