Report: Low bookings force builders to cut prices in some segments
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The increase in the number of unsold under construction housing units in the city is forcing developers to drop prices in certain segments.
According to real estate consulting firm Knight Frank, the number of unsold inventory of the real estate projects in Mumbai has risen by 11 per cent to 83,000 at the end of December 2012, from 75,000 units in December 2011.
"Till very recently, the developer fraternity has been averse to reducing rates but cracks are beginning to show as sporadic cases of price softening have been observed," states the report.
Prices had stayed steady all through 2011 and the initial part of 2012 in the face of weak demand only due to an even weaker supply scenario.
This equilibrium is, however, shifting as the increasing rate of units launched makes it harder for the market to maintain the same price levels, the report said.
With the core of residential market steadily shifting northward of the Mumbai Metropolitan Region over the years, 62 per cent of the total units under construction are now concentrated in Thane, Navi Mumbai and Peripheral Central and Western Suburbs compared with 57 per cent in 2011.
Developers are now looking to tap into the largest chunk of buyers looking for apartments priced upto Rs 75 lakh, reveals the report.
More than 35 per cent of the planned launches in 2013 will be in micro markets of central suburbs and western suburbs which is likely to put further pressure on unsold inventory and prices prevailing there.
"The central suburban corridor from Sion to Badlapur in peripheral central suburbs will experience maximum number of launches in 2012 and consequently highest unsold inventory levels in the market," according to the report.
Prices in some South and Central Mumbai locations like Parel, Lower Parel and Mahalaxmi have declined close to 10 per cent over previous three quarters while prices in Navi Mumbai, Thane and the preipheral suburbs of central and western Mumbai have eithe been stable or have trended marginally upward.
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