Real Value In Mumbai

In 1995, a 1,200 square foot house in Vashi in Navi Mumbai could have been bought for anything between Rs 21-66 lakh. Today, with property prices down by 10-40 per cent across one of the worlds most expensive real estate markets, you can pick up the same property between Rs 20-36 lakh. Stabilising property prices have kept the speculators away since last year, providing genuine buyers with real opportunities to finally buy a house of their own. Today, a budget of Rs 4.5-17 lakh can get you a one-bedroom house in Mumbai with a built-up area of 500-760 sq ft. If you are willing to loosen your purse-strings up to Rs 30 lakh you can safely target a two- or even a three-bedroom house of 617-1,800 sq ft area.

 

Consider the bargains. In south Mumbai, Worli commanded a rate of Rs 7,500-25,000 per sq ft (psf) in 1995, today it has dropped to Rs 7,000-11,000 psf, while in Mahim the rates have come down from Rs 3,500-10,000 psf to Rs 2,500-4,400 psf. A similar dip has been observed even in the western and central railway suburbs like Malad or Kurla where property prices slid from Rs 3,000-6,000 psf to Rs 1,800-3,200 psf and Rs 3,000-6,000 psf to Rs 2,000-2,500 psf, respectively. Even booming Navi Mumbai has not been spared from this downslide: property in Vashi is now available for Rs 1,700-3,000 psf compared to Rs 1,800-5,500 psf two years ago.

Dr G R Bahri, director, Unitech Limited says, After an initial correction, prices of flats in the resale market have stabilised, though in some cases they may have dropped further. For instance, the prices of our properties in Virar area were about Rs 500-600 psf five years ago but are now stable at around Rs 900 psf.

Says Akshay Kumar, CEO, Colliers Jardine Property Services, The rates for flats depends on various factors like age of flat, construction quality, history and reputation of the builder, location, and in some cases, even the buyer profile in the building.

The overall fall in Mumbais realty market has been a result of a combination of three main factors. First, speculative investors, who tend to artificially boost prices, have been kept away by the recession. Second, more land nearly 2,000 sq ft is expected to be available for development in Mumbai with the repealing of the Urban Land Ceiling Act. And third, more and more ailing textile mills in the heart of the city lower Parel are selling off parts of their integrated textile mills. These mills have already yielded 400,000 sq ft of land for development, and another 2.9 million sq ft is expected to be released soon.

Even as more residential land comes up for grabs, a number of builders have been busy developing a variety of projects. Ranging from the usual multi-storeyed apartments to the establishment of mini-townships in the suburban areas, residential properties are available to suit nearly everyones pockets.

There is a spate of activity going on in the suburbs along the western railway line. Vora Builders, for instance, has six ongoing projects in Borivali and Malad all multi-storeyed buildings offering one-, two- or three-bedroom apartments in prices ranging from Rs 5.49 lakh for a one bedroom to Rs 30.7 lakh for a three-bedroom house and penthouses ranging from Rs 47.84-91.98 lakh. Most properties would be available for possession within the time frame of six months to three years.

For lower-priced properties, you can opt for Unitechs West End in Virar available for Rs 4.5-11 lakh. For the more premium segment, you have the Rahejas properties in Andheri (Rs 36-50 lakh) or Kalpatarus in Malad (Rs 31.9-59 lakh) and the high-end properties of Tata Housing upwards of Rs 72 lakh.

Some of the more expensive properties are coming up in central Mumbai or its suburbs. The cheapest in this area is Ansals Hill Breeze in Mulund (west) available upwards of Rs 16.74 lakh. Hiranandanis buildings in Powai (Rs 44 lakh to 1.41 crore) and Tata Housings Golden Eagle in Parel (Rs 60-97.5 lakh) are being developed for the middle to high-end buyer. One of the costliest properties coming up for possession within the next six months is Kalpataru Heights in Mumbai Central, with a two-bedroom house costing upwards of Rs 1.01 crore and the penthouses coming for a hefty Rs 3.3 crore. Eastern suburbs like Kalyan and areas like Panvel in Navi Mumbai are also reasonable with properties developed by Godrej Properties available between Rs 5.22-17.4 lakh, but Thane is slightly more expensive (Rs 31.84-72.68 lakh).

Most of these flats offer a number of amenities like swimming pool, landscaped gardens, clubhouses, car parks but you pay extra for them depending on the builder and the property. Unitech, for instance, is charging nearly Rs 30,000-50,000 for various amenities, society formation, share money deposit, various taxes, maintenance and the dish antenna. Apart from this, you end up paying the preferential location charges in multi-storeyed apartments you pay more for a higher storey and development charges. Maintenance charges (Rs 0.65 psf per month for older buildings; Rs 2.00 psf per month for the newer ones) are normally charged after taking possession.

You will also have to bear the registration and stamp duty charges. Currently, you pay one per cent of the total value of the property as registration charges subject to a maximum levy of Rs 20,000. If your property is worth only a lakh, you escape the levy of stamp duty. Thereafter, it is charged in slabs, for a value of Rs 1-2.5 lakh, you pay 0.5 per cent of the value. For a property worth Rs 2.5-5 lakh you pay 3 per cent of the value above Rs 2.5 lakh in addition to Rs 1,250, for Rs 5-10 lakh you pay Rs 8,750 and 6 per cent of the value above Rs 5 lakh as stamp duty. The maximum slab of over Rs 10 lakh has a stamp duty charge of Rs 38,750 and an additional 8 per cent on the value above Rs 10 lakh.

To avoid paying such steep charges, buyers often prefer to negotiate the total value on paper by paying a higher cash component and a lower cheque component. This reduces the total value of the property on paper and attracts lower stamp duty on it; but this is not strictly legal. The cash to cheque ratio usually does not go beyond 80:20 (for used flats it could be as much as 60:40).

The payment procedure is normally a down payment of 20 per cent of the total paper amount upfront along with the cash component, if any. 10 per cent on completion of plinth (foundation) and about 5 per cent of this 70 per cent is normally accepted at the time of taking possession. The remaining is divided into instalments, normally equal to the number of floor slabs that a building has, calculated by adding one to the total number of floors. For instance, if it is a five-storeyed building then there are six slabs.

Before you go in for a property purchase, rememeber that the price usually quoted is for a built-up area; the actual carpet area is usually 30 per cent less than the built-up area. You can get a rough estimate of this by counting the number of tiles along the wall and multiplying the number along the length with those along the breadth since the tiles are normally one sq ft in area. If the percentage difference is more than 30 per cent, then avoid such a buy or be prepared to be saddled with an area much smaller than what you bargained for.

Kumar also advises a buyer to exercise some common sense while making a purchase. It would make a lot of sense to actually visit the site and notice small things like if the builder has a hoarding on the site (an indication of having a clear title), checking the title to the property, the plan, any Intimation of Disapproval, Certificate of Commencement, or Occupation Certificate. A few more pointers that may help you in making a purchase: if you are booking a property under construction, chances of deterioration in quality would be minimal if you go to a builder of some repute. And if your property is worth more than Rs 75 lakh in Mumbai, do get the necessary Income Tax clearance by filing form 37-I with the I-T department.