By Dr Sanjay Chaturvedi
Mumbai property price seems not to have respite from any recessionary trend in times to come. Big corporate and land sharks are all game to acquire land in Mumbai at any cost.
Peninsula Land, India Bulls, Videocon Realty, Reliance Land Realty, Indiareits have set approximately Rs.15000 crore to pour in primary real estate market before June 2011. Direct purchaser of land also includes old players and margin hunters and speculators in primary markets.
Realty funds like ILFS are sitting on Rs.8000 crore funds to be invested directly into FDI compliant real estate projects. HDFC Real Estate Mutual Funds and Funds of Funds are most likely to divert their funds into real estate since capital markets are volatile and saturated.
The next big bull run in real estate is expected in 2014-15 and corporate and players in real estate are all in game to buy raw materials for the time.
Traditional players came with IPOs like Oberai Realty, Orbit Group, Lodhas and D S Kulkarni are all gaining the advantage of RBI norms that institutional finance is made available to listed companies.
Redevelopment of societies is the major avenue to get land and FSI. Big societies and cluster development is in the air and city is gearing for unprecedented bull run in next three years.
Residential segment are witnessing a new trend through global players and corporate who wants to cash in even in recession. The ral estate market is defining itself into what had happened in Chicago in early 1990s. The entire finish stock is converted into rental units and few hands manipulate the rentals later on. In Ahmedabad, the trend already started where builders are not keen in selling their residential stock but counting on recurring revenues.
The second homes purchase to save tax through means of housing finance had did nothing but concentration of resources into few select hands. 19% of Mumbai house owners owns two or more properties. A survey conducted by Accommodation Times Research and Education Foundation reveals that 14% of total fresh finished stock is lying vacant. This figure was cited by Former MMRDA Commissioner Dr Sudhir Joshi who said that 7% of Mumbai properties are lying vacant.
The real estate market is bifurcated into premium segments and budget homes which are mostly developed in extended suburbs. For premium properties there seems to be a recess and rally may start even before new financial year 2011-12. Funds flushed real estate market is sitting on a bomb which may explode by 2013 if not early.