The real estate market is showing peculiar trends these days. The sales for home properties have nearly halved as compared to the previous years‘ figures. One of the main reasons is that since the Information Technology (IT) boom is over, NRIs are hardly pumping money into properties. In spite of this, the developers have refrained from slashing prices to keep their heads above the water.
Developers say that in spite of the drop in sales; there is a little chance of the real estate prices going down. This being because the prices of labor, sand and cost of construction going up. The land owners are not reducing prices either. So it becomes infeasible to slash rates by anything more than 5-10%. Also, the cost of flats are set to rise some more after the Bombay high court recently lifted the stay on recovery of service tax from customers. The service tax is 2.5% of the total cost of the property. This means that if the flat cost is Rs20 lakh, the customer has to pay Rs. 50000 as service tax.
An example of these high prices can be seen in Mumbai’s Lower Parel area, which is now rapidly becoming a hot spot for the rich. Homes in the textile mill area, which used to be sold anywhere between rupees 3,000 ($66) per square foot to Rs. 6,000 ($132) per square foot in the early part of this decade, are now priced between 15,000 rupees ($330) and 30,000 rupees ($660) per square foot as luxury homes. On the other hand, the demand is decreasing because property prices have gone beyond the reach of the common man. There is a huge demand for residential properties but people are waiting for the prices to come down. So, with the sales dropping by over 50% as compared to last year’s figures, the pressure is mounting on the developers to slash prices. Hence, discounts on property of anything between 10-15% could be expected soon.
The real estate market is showing peculiar trends these days. The sales for home properties have nearly halved as compared to the previous years‘ figures. One of the main reasons is that since the Information Technology (IT) boom is over, NRIs are hardly pumping money into properties. Inspite of this, the developers have refrained from slashing prices to keep their heads above the water.
Developers say that inspite of the drop in sales; there is a little chance of the real estate prices going down. This being because the prices of labor, sand and cost of construction going up. The land owners are not reducing prices either. So it becomes infeasible to slash rates by anything more than 5-10%. Also, the cost of flats are set to rise some more after the Bombay high court recently lifted the stay on recovery of service tax from customers. The service tax is 2.5% of the total cost of the property. This means that if the flat cost is Rs20 lakh, the customer has to pay Rs. 50000 as service tax.
Real estate services firm Jones Lang LaSalle India (JLL) says newly-launched residential projects are recording an average 15% lower prices, especially in Delhi and Mumbai? markets witnessing oversupply in many pockets.
An example of these high prices can be seen in Mumbai’s Lower Parel area, which is now rapidly becoming a hot spot for the rich. Homes in the textile mill area, which used to be sold anywhere between rupees 3,000 ($66) per square foot to Rs. 6,000 ($132) per square foot in the early part of this decade, are now priced between 15,000 rupees ($330) and 30,000 rupees ($660) per square foot as luxury homes.
On the other hand, the demand is decreasing because property prices have gone beyond the reach of the common man. There is a huge demand for residential properties but people are waiting for the prices to come down. So, with the sales dropping by over 50% as compared to last year’s figures, the pressure is mounting on the developers to slash prices. Hence, discounts on property of anything between 10-15% could be expected soon.
Immobilienmakler Heidelberg Makler HeidelbergSource by Sarita Khanna