More than 7 crore sq.ft. will come soon in residential segment
Lisas Foras, a Mumbai based research firm under the headship of Pankaj Kapoor has predicted further fall of 15% in residential rates. He further said that more than 7 crore sq.ft. of residential space will hit the market soon in the Mumbai region alone. He was speaking at a press meet called by Press Club Mumbai on 19th March 2009. Now that after 5 years in 2014, these projects should be ready and hitting the market. The rates are likely to fall if such huge supply going to come in the market. "What Ails Real Estate" was the topic for discussion while the panellist like Parimal Shroff, Vinod Sampat, Vimal Punamiya and Suresh Menon were invited to speak on the subject. According to Parimal Shroff, the last recession lasted for nine years ( 1995- 2004), the present scenario must be looked at seriously. Advocate Vinod Sampat cited some of the stats of registration figures which say that there is a fall recorded by the department for the loss of revenue of stamps upto 9% as compared with last year. Pranav Vakil of Knight Frank asserted that short supply will be reason for future price rise. He said that faulty valuation of land bank is the main reason for fall of share prices of realty companies on the stack exchanges. Vimal Punamiya said that valuation of property must be seen in its truly value rather than its notional value. He has cited many cases of Income Tax and Stamp Duty. Pankaj Kapoor's presentation gave the breakup of projects which are coming in major cit- ies and a huge pile up of under construction projects which are in pipeline, will soon hit the residential segment in the real estate market. Though there were no answers to some of the question asked by media like reducing the profit margins by builders and cheap home loans, costing of real estate development revealed that land cost in the project touches almost 85% in south Mumbai. Sunil Mantri, president elect, MCHI, said that there is a need for builders to address two issues. One is whether builders will complete the project and second the minimum price discovery. He emphasised on schemes of buy back at certain price to retain the customers' confidence. Vijay Wadhwa of Wadhawa group said besides the real estate in recessionary trend, they are the first to correct the prices at a lower level for some of their projects. He said there will be loss of jobs because of such trend in the realty sector. Now after six years of the press conference, the real estate market happens to be the same as in 2009 and all the statements made looks very relevant to today’s scenario except we expect the estimation of Pankaj Kapoor that we are soon going to have 7 crore sq ft finished stock in MMR. Pune is the worst case where almost 50000 units ready lying vacant and there are no takers.