Rise in realty prices in Mumbai?

Speculation is rife in the real estate market that property prices could rise in Mumbai.

In yet another dramatic turnaround in the realty market in the country, there are murmurs that the real estate prices could shoot up in Mumbai. This has come following a report by real estate consultants JLL India. The Indian arm of the Chicago-based firm has found that there will be a six per cent rise in property prices in Mumbai in the 2015-16 financial year. JLL India’s findings state that a recovery is expected in the demand for realty pieces in the city.

Other possible reasons for the price rise could include an increase in service tax and reckoner rates, up-and-coming infrastructure and a prospective hike in land value. With the service tax increased to 14 per cent from June 1 this year, the costlier raw material and financial services, such as legal fees, may propel real estate prices further north. Also, with the Maharashtra government increasing the reckoner rates by 30-40 per cent in January this year, there was a hike in tax on purchase of new property. This included stamp duty, value added tax, sales tax and registration charges.

In some other factors, with the city having a buildable area of only 200 sq km of an overall area of 480 sq km, there is always a likelihood of land prices consistently increasing in the city. On a positive side, the up-and-coming infrastructure in the city too may be a reason for a surge in property prices. The much-awaited infrastructure includes the extension of the metro and the monorail, and the launch of the Navi Mumbai International Airport and the nearby smart city - NAINA (Navi Mumbai Airport Influence Notified Area).

The experts too resonated similar sentiments. Vikas Bhasin, Managing Director, Saya Homes, explains further, “The reports that we are getting are definitely anticipating improvements in the real estate market and suggesting that there could be a significant increase in the property rates this fiscal year. It’s a perfect time for buyers who are interested to invest in properties as the cost of the properties are expected to see an upsurge in the near future.”

The report also finds that the rise will take place in the second half of the current financial year. This will be a continuation of the ongoing pattern. According to data available with 99acres.com, at the end of the October-December 2014 quarter, the average realty rates in Mumbai stood at Rs 16,900. And although they witnessed a minor rise of two per cent with the average real estate price at Rs 17,200 at the end of the January-March 2015 quarter, it can be classified as a recovery of sorts for the struggling realty market in the maximum city.

Kushagr Ansal, Director, Ansal Housing, says, “There is immense hope in the realty market at the prospect of the property prices most likely to shoot up in the second half of the current financial year. Enquiries for housing properties in Mumbai have seen an upward drive which could eventually positively recover the property market in a few months down the line.” With the increase in enquiries for residential and commercial properties in the city, demand for properties is also expected to rise.

Bhasin adds, “At present, developers are looking to entice customers by planning to offer attractive schemes, discounts and waivers. This is to enable the potential buyer to reap in the desired benefits. Details of this will be known as we move ahead in the latter half of the financial year, depending upon the market’s form.”

SOURCE: 99acres.com