Realty rates up as ready flat stock dwindles

Property rates have begun climbing on the back of seasonal demand and a steady fall in the stock of ready possession flats in Mumbai.

In recent weeks, the Ekta Group has hiked rates for almost-ready flats at Lake Primerose in Powai from Rs7,400 per sq ft (psf) to over Rs7,800 psf. Kanakia Builders have increased rates for its Kanakia Samarpan project at Kandivli from Rs7,800 psf to Rs8,000. At Hiranandani projects in Thane, the prices of ready flats have been raised from Rs5,100 to Rs5,700 psf, excluding floor rise.

Brokers say this is happening because developers don’t have too much unsold stock of ready-built property. Fearing that rates will increase again, buyers who were waiting for the market to correct further purchased many ready flats in the last three months, pushing up prices.

“The demand has always been there. So, one is not surprised that flats were sold so quickly. But, what is happening now is that developers have increased rates even in under-construction projects. If rates remain high, it will be difficult for the property market to sustain its growth,” says Mahesh Ahuja of Dreamz Housing.

At Hiranandani in Thane, rates have been increased from Rs5,100 to Rs5,300 psf (plus floor rise) for some categories of under-construction flats. Some high-end under-construction apartment prices have been increased from Rs6,100 to Rs6,300 psf, plus floor rise.

At Virar, the average rates for Rustomjee’s Global City have increased from Rs1,900 psf to Rs2,700. HDIL’s premier residences at Kurla, which were earlier booked at roughly Rs5,250 psf, are now being quoted at Rs6,151 psf. Neptune Group has increased rates in its Flying Kite project in Bhandup by 26% from Rs4,691 psf to Rs5,900 psf.

DB Realty has increased rates for its under-construct project in Kandivli from Rs7,000 to Rs7,500 psf.  

The Hiranandani Constructions has increased its rates for its flats opposite Raghuleela Mall, Kandivli, from Rs7,500 to Rs8,500 psf.

“Owners of resale apartments too are demanding a high price. I had confirmed a deal for Rs 1.20 crore at Andheri. But, for some reason, the buyer backed out. The seller is now quoting Rs 1.35 crore. With fears of a recession ending, the seller feels he now has an opportunity to earn more and is willing to hold on till he gets his price,’’ says Prakash Ahuja of Prakash Estate Agency.

Brokers say the shortage of ready flats is partly the result of many redevelopment projects not taking off due to the rise in Transfer of Development Rights (TDR) rates. Under the TDR policy, developers are allowed to use the floor space surrendered to the government for public purposes in the north of the city. In the past one year, TDR rates, which had dropped to an all-time low of Rs 900 per sq ft, have steadily risen to Rs 2,400 psf.

“Redevelopment schemes were most profitable when TDR rates were low, mutually benefiting housing societies and developers alike. Developers are still in two minds as it adds to their construction cost. The government needs to intervene,’’ says Vinod Thakkar, past president of the Real Estate Association of Goregaon.

Not surprising then, analysts are signalling caution. At a panel discussion on real estate organised by DNA recently, Balaji Rao, managing director of Starwood Capital Venture, said that the rebound in the property market had been driven to a large extent by the various fiscal stimuli and monetary easing measures undertaken by the government.

``But I feel this could be just a dead cat bounce. If the markets do not catch traction, then the possibility of a double dip is real. To effect such a takeoff, it is critical that the developers hold prices and keep pushing volumes,’’ said Rao.