Real estate news on South Mumbaiís high-end luxury homes find few takers

Building materials, Price Trends, Mumbai
Posted on Sep 12, 2013
MUMBAI: High-end properties in South Mumbai have fewer takers in a gloomy economy. While property appreciation in Sobo, as the area is fondly called, has dropped to 10 per cent from 30 per cent two years ago, rental yields have fallen by more than half. "All the newer projects in South Mumbai are in the ultra-luxury segment and it's difficult to find buyers for these higher configuration and big-ticket homes in the current market," said Akhil Kapur, owner of real estate brokerage firm AJ Housing.

In Mumbai's real estate market, buyers can't sell a house until a project is complete, compounding the problems of those who have invested in multiple houses. Newer projects that are marred by delays and longer exit-duration clause are not investor-friendly, said Puneet Sejpal, who runs a gas station and invests his business surplus in South Mumbai properties. "The lock-in period is so long that sometimes you are bound by the developer to not sell a house, till the project is delivered."

According to property consultants, sale of new property has dropped 30 per cent in the past eight to 12 months, with fewer investors and end-users willing to buy expensive homes. For every 100 homes available for sale in a quarter, only six are getting sold. "Many of us are making money elsewhere to be able to pay our dues. We are unable to sell them as there are no buyers in the market," said an investor who is stuck with three new apartments in SoBo.

Napean Sea Road, which boasts of some of the most expensive apartments in the country, has premium projects by Rohan Lifescapes, Lodha and Orbit Developers. Brokers say about 25 per cent of apartments in these new projects remain unsold. "Investors who might have booked at a lower rate during pre-launch are looking at selling at double the prices, but are not getting buyers," said Jay Shah, a real estate agent dealing with south Mumbai properties.

According to Mudassir Zaidi, national director, residential, at Knight Frank India, the Sobo market has undergone a change in the past three years. "Earlier, south Mumbai market was predominantly a resale property market, but now there is a lot of new supply coming in." This has led to a pile of inventory.

"Inventory has increased in the past two years, but sales are not happening at the same pace," said Ashok Narang, partner at real estate property firm L Lachhmandas & Co.

According to Shah, around 80 per cent of south Mumbai investors are looking at eastern and western areas of the city for better returns.

Besides falling resales, rental yields, too, have come down from 3-5 per cent in 2008-11 to 1-2 per cent in 2011-13. "As of now, the rental yields in south Mumbai are even below 3 per cent and it makes no sense for an investor to come in," Sejpal said.

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