Residential prices are expected to see a 5-15% decline in Gurgaon, Noida, Pune and Bangalore because of a surge in supply that outstrips demand in these overheated property markets, according to a report by Macquarie Research.
At present, prices in Gurgaon, Noida, Pune and Bangalore are between Rs3,500 and Rs7,500 per sq. ft. In South Mumbai, the limited scope for new supply will either see prices remaining flat or increasing by about 5%. This is however less than the 5-15% increase in prices the region has seen in the last 12 months.
Some areas in Mumbai’s suburbs and Delhi could see a 10% correction in prices. “If demand is hit and if the expected supply does come up, we will see a reasonable correction in micro markets in some cities,” Abhishek Gupta, Head, Research, Jones Lang LaSalle Meghraj, a real estate consultancy firm said.
Cities such as Hyderabad, Chennai and Kolkata are expected to see a 5-15% increase in prices in the residential segment because of the low or moderate levels of prices in the region. Tier II or smaller cities such as Ahmedabad, Chandigarh, Indore, Jaipur, Mangalore, Mysore and Raipur are also expected to see prices increase by 5-15%. However, this is less than the 10-25% price increase the cities witnessed in the last one year.
The study ranks Chennai and Kolkata as the most attractive markets in the residential segment and Gurgaon and Pune as the most unattractive markets.
Real estate prices in India have risen each year for the past five years as tax benefits for home ownership and rising wages helped more people buy homes. That, coupled with a rising stock market created wealth that went into property. However, rising interest rates and a decline in the stock market this year and dearer credit is slamming the brakes on this growth.
Retail rentals are also expected to see a correction in certain cities over the next one year. Lack of supply has driven rentals to a level where retailers find it hard to operate profitably. “With retail sector margins in the 3-5% region and rentals as high as 15-20% of sales in certain geographies, a rent correction is imminent,” the report says.
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1 comment:
A price correction of 10-15 per cent is slowly happening in the realty sector across the country though it is area-specific in cities.While realtors point to various factors for the downtrend, developers blame skyrocketing land prices. Others tend to point fingers at a demand-supply mismatch and investor disenchantment. Though a definite correlation cannot be established between the stock market and the price drop, investors/speculators are exiting the realty space.The impact is reflected more in the secondary markets (property resale) and in projects that have come in the last two years. The central business districts of the metros appear to be holding their own, especially in Delhi and Mumbai where economic drivers have been strong. You are happy that the value of your real estate property has gone up several time in the last three-four years. But your happiness is short-lived when you decide to unlock the value. There is a marked difference between the perceived value and realised value. The buyer is not willing to pay the price you initially thought.For more view- realtydigest.blogspot.com
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