Bandra property shows buyers and developers wary

Nearly 90,000 visited MCHI CREDAI Property 2013, the exhibition by Maharashtra Chamber of Housing & Industry (MCHI)-CREDAI from April 11 to 14 in tony Bandra Kurla Complex. In the last exhibition in November 2012, the last count was 97,176.

While MCHI-CREDAI Property 2012 had 120-plus developers, the 2013 edition saw just 102 developers.

Many prominent names such as Omkar Realtors and Runwal group were not there and only 12 per cent of the projects exhibited were new. According to sources in the MCHI, the exhibition did not translate into big sales.

Though summer is not a great season for developers, unlike the last few months of a year, crowded with Dussera, Diwali, and Christmas, both buyers and developers are cautious on buys and launches, respectively.

Absorption of homes in the national capital region (NCR) declined 12 per cent in the second half of FY 2013 compared to the corresponding period of last year, according to global consultant Knight Frank.

The number of launches also declined 31 per cent in H2 of FY13 compared to the corresponding period previous year.

"Buyers are adopting a wait-and-watch policy," said Samantak Das, director, research at Knight Frank.

"Apart from RBI cutting rates, nothing much has changed on economy front," Das added.

Mismatch on pricing expectations is the main issue in improving sales momentum, say analysts and consultants.

Parikshit Kandpal, an analyst with Kharvi Broking, in an April 16 report, said a few developers were offering Rs300-500/sq ft discount during the Mumbai exhibition which translated to a 5 per cent discount on properties to evince buying interest.

"Buyers sentiment is at an all time low as 20-30 per cent price correction is required for return of affordability," Kandpal added.

Added Sanjay Dutt, managing director of global consultancy Cushman & Wakefield: "There is a mismatch. It is wrong for buyers to assume that every developer is in a bad shape. Developers are also not sensing the situation and offering attractive prices in many places."

Developers said they were not in a position to cut prices due to increase in input prices, high borrowing costs and so on.

"Buyers expectations are high but developers are not in a position to cut prices due to various factors," said Paras Gundecha, president of MCHI-CREDAI.

However, Rajeev Talwar, group executive director, DLF, said buyers were waiting for the rates to come down after inflation cooled down to sub six per cent levels in March than waiting for the prices to come down.

Developers like Gundecha say launches in Mumbai are low given the delay in permission especially for high rise buildings.