Mumbai’s Real Estate Will Take At Least A Year To Revive, Knight Frank Says

Maharashtra’s change in law allowing a reduction in ready-reckoner or benchmark property rates suggests that a revival from the disruption caused by the cash ban and a strict housing regulation may take another 12-18 months, Knight Frank India said.

Most of the people who don’t need houses immediately in Mumbai, India’s second-largest property market, will prefer waiting to see a further correction in real estate prices, Gulam Zia, executive director of the property consultancy firm said in an interview with BloombergQuint.

Maharashtra amended the Bombay Stamp (Determination of True Market Value of Property) Rules, 1995, according to a gazette notification on March 12. This gives the Inspector General of Registration powers to lower the benchmark rates, the first time in at least a decade.

A possible cut in ready-reckoner rates, which serve as the basis to calculate stamp duty and registration fee, reflects the government’s assessment of the market. Property prices have fallen and developers are sitting on unsold inventory after the demonetisation hurt cash-driven realty market and the Real Estate Regulation Act stipulated strict deadlines and left smaller developer without funds. The state is also considering waiving the property tax on flats with carpet area of up to 700 square feet to clear the unsold inventory.

Anuj Puri, chairman of property consultant Anarock, agreed that lowering ready reckoner rates won’t boost demand. But a revival has already begun, he said.

“Mumbai’s top six developers recorded sales of approximately 125 units during the last three days of Gudi Padva festival sales. This sales figure during the Gudi Padva was one of the best in the last three years.”

Also Read: Maharashtra Open To Waiving Property Tax For 700 Square Feet Houses