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Realty Check: Mumbai builders
see no price cuts in FY13
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Moneycontrol Bureau
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Even as realty prices in Mumbai show no signs of
softening, developers are blaming lack of regulatory
approvals for further worsening an already skewed
demand-supply situation in the city.
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MCHI - CREDAI, a Mumbai-based industry body for
developers on Tuesday met the chief minister of
Maharashtra with a detailed presentation requesting
that the process of approvals for real estate
projects in the state be quickened.
Home buyers and industry watchers say
developers are equally to blame for falling sales as
they are unwilling to reduce prices. A combination
of high property prices and rising interest rates has
hit demand, but builders are holding out in the hope
that eventually buyers will capitulate.
On their part, builders say they do not expect prices
Share
to come down anytime soon.
"Input costs are so high that it is very difficult to lower prices from current levels,"
Mayur Shah, Managing Director, Marathon Realty told Moneycontrol.com.
"For developers, the cost of funds has risen sharply as banks have reduced loans
to the sector. Moreover, we should not generalize in saying that overall price
correction is on the anvil. There are different income segments for home buying
wherein the demand-supply equations also vary," he said.
Banks have become cautious while lending to real estate companies as well as home loan
customers. This is quite unlike during the boom years between 2004-2007 when banks were
willing to lend upto 100% of the property value.
According to RBI data, banks' loans to housing sector (including priority sector housing) grew by
12.1% (at Rs 3.88 lakh crore) in FY2011-12 as against 15% growth in FY2010-11. Commercial
real estate was worst hit with a muted loan expansions of just 7.8% in FY12 compared with
http://www.moneycontrol.com/news/business/realty-check-mumbai-builders-see-no-price-cutsfy13_699510.html[04-07-2012 5:41:34 PM]
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Realty Check: Mumbai builders see no price cuts in FY13 - Moneycontrol.com -
21.4% in FY11.
"Banks’ declining exposure to real estate companies is a temporary phenomenon," Dharmesh
Jain, CMD, Nirmal Lifestyle.
"There is enough demand in the market. Good projects will get funding even in today’s scenario.
If good (regulatory) policies are in place, this sector will pick up in FY13. I don’t see any price
correction unless the sales volume goes up. Realty sector is going to witness fast-track growth in
the coming ten years."
MHCI-Credai is asking that the 60 days approval system of the Municipal Corporation of Greater
Mumbai should be implemented in all urban local bodies of Mumbai Metropolitan Region (MMR).
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"Things should be streamlined soon," said Andish Ajmera, Director, Ajmera Group of Companies.
Jul 4 2012, 15:58
"Real estate companies should be in their comfort zone. Development has to go. The gap
between demand and supply has to be bridged. Because of this gap, the prices have
skyrocketed. Moreover, time of regulatory approvals has to be shortened," he said.
See Nifty in 5100-5500 range
ahead, says Prime Broking
- in MARKET OUTLOOK
According to Vyomesh Shah, MD, Hubtown , formerly known as Ackruti City, banks do no want to
lend money for lands but for construction works. Instead of correction, prices are likely to go up
unless the supply side constraint is addressed.
Jul 4 2012, 15:55
Int costs to fall 50%; see FY13
sales at Rs 1500cr: Gati
Saikat Das
[email protected]
- in Business
Interviews
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http://www.moneycontrol.com/news/business/realty-check-mumbai-builders-see-no-price-cutsfy13_699510.html[04-07-2012 5:41:34 PM]
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