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Forecast Of 2012 Mumbai Real Estate Market


									Buyers arent expressing any interest in projects that are perceived to be
overpriced and this trend will continue throughout the first half of

 Real Estate Investment:

 Year 2012, Mumbai underscore its status as a relatively safe haven for
Indian real estate. High Networth Individual (HNI) investors will re-
enter market in a big way and increased HNI investment volumes are likely
to put pressure on core cap rate. Market could see the short-run
fluctuations as investors alternate between seeking out more risk and
briefly pulling back.

 The debt capital availability is likely to increase the core investments
in financial capital; however financing challenges will continue for
high-risk, opportunistic real estate investments.

 There is every indication in 2012, a number of distressed residential
property of Mumbaiby smaller developers will be acquired by large and
medium-sized developers at sub-valuation prices. Few developers are
gearing up to sell their non-core land and divest their stakes in non-
core business such as hospitality and retail.

 Retail Real Estate:

 Mumbais retail real estate looks buoyant (bright) in year 2012. well see
some of the cities older malls being repositioned, re-tenanted and
refurbished. The vacancy level will increase in several poorly-designed
and unfavourably located malls. The redevelopment of several old
residential societies in the Island city will give rise to an unexpected
availability of more high street retail space. Store-within-store
formats, drive through lanes and pick-up zones will be implemented in

 Commercial Real Estate:

 Those who thought 2011 was a discouraging year for Mumbais office space
market, so do 2012 will not bring any obvious reasons for cheer. The
demand is marginally lower than in 2011 with IT and ITES companies
becoming even more cautious on account of the expected reduction in IT
spend by US and European companies. Uncertain economic environment will
continue leading to reduced employment growth and therefore lower the
fresh commercial property absorption. The tighter lending standards for
commercial construction will not help either.

 On the brighter note these market conditions will continue to favour
tenants in most of Mumbais micro-markets by ways of a larger bunch of
options, rational pricing and various concessions. The real estate market
conditions are optimal for consolidation and relocation and many Mumbai-
based occupiers will avail of this option throughout 2012.

 Rentals of commercial property in Mumbaiwill show a further though
marginal drop in the first half of the year as infusions of additional
stock lead to higher vacancies. Also demand for smaller offices in Grade
A projects is expected to increase as more small and medium sized Indian
corporates take advantag

 Residential Real Estate:

 Real Estate market set to the deepest by the second quarter of 2012,
will see the beginning of a recovery in the Mumbai citys residential real
estate fortunes by the second half of the year. There is very little
scope for appreciation in under-construction residential projects. Unsold
under-construction stock will increase significantly. A lot of scope for
strategic pre-launch bulk investment deals by High Networth Individuals
(HNIs) who can predict where the market will head later in the year.

 In current scenario, buyers are not expressing any interest in
residential property of Mumbai that are perceived to be overpriced and
this trend will continue throughout the first half of 2012. Mumbais
residential market will be more or less sustained by the sale of an
affordable priced mid-income apartments. The absorption will be driven by
both end users and HNIs investors.

 On the other hand, the completed high-end properties will become
costlier by mid-year largely because of reduced supply in this segment.
The reduction of interest rates expected by the second half of the year
will help kick-start a generalized though cautious recovery in demand for
residential property in Mumbaileads to increase in new launches. HNI
investors would have perceived the trend and already parked their monies
in advantageously located residential projects by well funded developers.

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