Here we go again: more predictions about residential property prices in Mumbai — the most expensive property market in the country — coming down in 2012.
This time, it’s from Bank of America Merill Lynch (BofAML), which forecasts that residential property prices in the city could fall by 15-25 percent over the next six months.
The brokerage says Mumbai’s residential property prices jumped 14.6 percent (compounded annual growth rate) over the past decade, higher than the estimated 9-10 percent growth seen in earlier decades. “This growth appears unsustainable and prices should undergo mean revision over the next 1-2 years,” it predicts in a report.
To support that view, its analysts also visited some building sites in Mumbai and discovered that developers were offering 5-8 percent discount to buyers depending on the project.
BofAML predicted that given the financial difficulties being faced by developers, they would offer higher discounts in 2012. Reuters
BofAML predicted that given the financial difficulties being faced by developers (high debt loads, high funding costs and limited access to funds), they would offer higher discounts to push sales in 2012.
BofAML is not the only one that believes a price correction is around the corner.
Jones Lang Lasalle, a real estate consultancy, also noted in a recent press release that there is already a price correction of sorts happening “below the radar”. “While official prices have remained firm in ready-to-move-in projects, prices have fallen by at least 10-20 percent in under-construction projects which are less than 30 percent complete,” it said.
Source- http://www.firstpost.com/business/mumbai-property-will-prices-fall-in-2012-195169.html