Unrealistic Property Rates

By Murari Chaturvedi

Down swing in property market is once again giving sleepless nights to the developers and property investors. The feverish pitch for land buyng is staggering property market investors have made the property market volatile which may soon go out of hand. This may, in all probability, trigger the stagnation and ultimately crash. The biggest casualty is actual users in such a unreasonably hyped property market. It is the basic fundamental factor that consumer cannot be replaced in real estate development. Unfortunately property market does not have any regulatory mechanism to face such situation. And if the cash in property market happens, the investors, banks, and other financial institutions will lose havity. The hype created by by such high priced properties, does not augur well for the industry. In Mumbai already the rates have gone through the roof for properties. A small flat of around 500 sq. ft. area is being quoted Rs. 1.20 crores and above in western suburbs. It is time for the government, industry leaders and market forces to understand the enormity of the situation, and find way out to hold price line within reasonable limit. The high prices of flats may not sustain for long and hence needs correction by rationalization. There is much talk about foreign direct investment (FDI) in real estate in India. Mumbai could be the prime choice of such investors, but not if the property rates are prevailing to such high levels. Another factor which could adversely affect the property market in and around Mumbai, and other metropolitan cities, is that many commercial and industrial organisations do not find it viable to set their shops at such high property rates. A number of small and big industries have already moved out of Mumbai to Gujarat and other adjoining states. There are number of instances where commercial and industrial organisations have opted out of Mumbai and ultimately out of Maharashtra. These organisation are the ultimate purchasers of properties, so if they move out of Mumbai, the resultant situation may not be rosy in near future.

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