Mumbai's real estate crashes, suburbs turn attractive

Skyrocketing real estate prices in Mumbai and global economic conditions have badly hit Mumbai's real estate sector with sales falling by nearly 70 per cent.

There is a clear indication that sales have fallen dramatically in Mumbai city with real estate companies posting losses in quarterly results.

The sales of top 5 real estate players in Mumbai have seen a significant drop.

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DB Realty registered a net loss of Rs 2 crore (Rs 20 million) in Q1 2012 as opposed to profit of Rs 41 crore (Rs 410 million) in same quarter last year.

Likewise HDIL and Orbit Corp have registered significant downtrend their sales. On the contrary, the outskirts of Mumbai are witnessing higher sales.

Netz Realty, which has an affordable housing project in Boisar and Karjat near Mumbai has registered sale of 70 units within 2 weeks and expect to sell out 250 units project within a month.

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"Many real estate buyers who wish to own a house of their own are turning towards outskirts of Mumbai like Panvel, Karjat and Boisar," Ameya gore, chief spokesperson of Netz Realty says.

"I had a very small investment budget of only Rs 12 lakh and industrial town of Boisar was the only option where I could have a flat of my own. Mumbai does not provide anything for me anymore. Anything here costs atleast a crore," said Santosh Mali who recently bought a flat in Netz Realty's Boisar project.

TATA Housing and HDIL had sold out their first phases of projects in Boisar and Palghar in record time even though their Mumbai properties are witnessing major drop in sales.

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"With builders not reducing prices in Mumbai even after the slowdown, the trend is likely to continue for buyers who have lower investment pockets."

"Even for those who have money to invest in Mumbai, right now the market exists in outskirts as property prices will appreciate there while a major correction is expected in Mumbai. Moreover with these high prices, Mumbai is giving rental yeilds of only 1-2 per cent while in places like Boisar, rental yield on residential properties is at 6-7 per cent," Akash Jhaveri, a real estate investment consultant and researcher says.