Housing market in Mumbai region still dragging feet :The Times of India

The Mumbai Metropolitan Region (MMR) residential market saw its worstever performance this year since the post global financial crisis era, said a Knight Frank report released on Tuesday .

Absorption and new launches shrunk 22% and 30% respectively between January and June 2015 compared to the previous six months between July and December 2014.

“Housing sales of 28,446 units and new launches of 18,887 units made this year the worst half-yearly period in the post global financial crisis era,“ it said. The report said Mumbai has nearly two lakh unsold homes even as sales continue to slide and that confusion over Mumbai's new development plan has impacted approvals for new projects.

“The unsold inventory declined from 2,04,070 units in July-December 2014 to 194,510 units in January-June 2015, mainly on account of a sharp reduction in new launches,“ said the report.

Investors too have little interest in real estate due to suboptimal returns in comparison to other asset classes like equity and debt, it said.

The maximum sales were reported in the central suburbs (31%) and western suburbs (21%) during the first half of 2015. “The peripheral central suburbs is the largest market in the MMR in terms of quantum of under-construction housing units (27%) while the western suburbs ranks second with 20%,“ said the Knight Frank report.

“Residential market in Mumbai is still reeling under tremendous pressure with drastic drop in new launches at the back of falling demand,“ said Samantak Das, chief economist and national director, research, Knight Frank.“Recovery does not seem eminent until 2015 and we expect sales to be in the range of 63,000 units, which is marginally below the 2014 levels,“ he added.

In the MMR, property prices increased by 2.5% so far in 2015 compared to 8% in the same period last year. “We forecast stagnant prices over the next six months,“ it said.

With an average house price of Rs 5 crore, the premium market too has been struggling in Mumbai. “Reeling under pressure of a high unsold inventory , these markets witnessed a drastic reduction in new launches. After 121 units in the second half of 2014, new launches dried up in the first six months of 2015,“ it said.

In the office market, MMR witnessed an absorption of 2.5 million sq ft in H1 2015, down 48% in contrast to H2 2014.