Mumbai: Though residential real estate prices have corrected sharply over the past few months in some of the leading cities in India, industry players are divided on their outlook for the sector with one section expecting a further correction in realty prices while others are anticipating a recovery amidst an improving macro-economic environment.
Real estate analysts at Ambit Capital expect the realty market to remain subdued due to oversupply and sluggish demand from consumers, and said that it would take at least 11-15 quarters for the liquidation of unsold inventory in prime cities like Mumbai and the National Capital Region (NCR). According to them, the unsold inventory as on December 2014 stood at 2.04 lakh units and 1.92 lakh units in Mumbai and Delhi respectively.
“While stated prices (prices which the real estate agents quote) remain elevated, transaction prices have already fallen by 10-15 per cent, and real estate brokers are saying that a further correction is a must for inventory liquidation. Discounts have increased significantly in the secondary transactions market and distressed real estate liquidation by lenders (who have not been repaid by developers) is becoming increasingly common,” said analysts at Ambit Capital.
However, Ramesh Nair, chief operating officer, JLL India said that barring a few pockets in Delhi, the industry hasn’t witnessed any major base price corrections in most cities. “Most of the price correction that we have witnessed is in the form of discounts, waiver of floor rise rates, waiver of stamp duty and interest subvention schemes offered by builders to consumers,” he said. According to him, the real estate prices could see an appreciation of upto eight per cent in the next two years.
Lalit Kumar Jain, chairman of realtors apex body CREDAI, said that the realty prices in most markets have touched rock bottom and the possibility of prices coming down further looks unlikely.
