Suburban Goregaon saw the biggest drop of 20 per cent in sale prices of new residential projects in 2015, according to a Cushman & Wakefield report.
The report tracks real estate development in Thane, Goregaon and Malad in Mumbai, among other regions in the country. It shows new residential projects in select micro markets are cheaper by 4-20 per cent on average weighted basic sale price over the last two years.
“A correction of launch prices will ensure attractiveness and relevance of these locations to end-users. The economic confidence slowly creeping back into end-user sentiments aided by a corrected base price as well as lowered ticket size is likely to provide the needed boost to sales,” said Shveta Jain, Managing Director, Residential Services, India Cushman & Wakefield.
Goregaon has witnessed the unveiling of about 2,700 units since 2013, making up for 9 per cent of Mumbai’s total mid-segment launches during the period, according to the statement issued by Cushman & Wakefield.
“Unlike other locations, Goregaon has not seen a change in the apartment configurations and has only seen rationalisation of prices. In 2015, the average selling price of a 2 BHK declined 20% in the Goregaon market to Rs 10,500/sf from Rs. 13,171/sf in 2013, while apartment configuration registered a slight increase. The decline in average selling price has led to 17 per cent lower ticket (launch) price seen at Rs. 129 lakh in 2015, from Rs. 156 lakh that was witnessed in 2013,” it added.
A comparison has been made between 2013 and 2015 prices because a window of 24 months is long enough to observe a specific trend such as fall in price, new projects etc, especially in the residential segment, as against a shorter time frame.
On the other hand, Thane has continued to witness sustained launch activity over the last few years, as per the report. It said Thane has witnessed approximately 5,100 unit launches, accounting for 17 per cent of total mid-segment launches in Mumbai. The concentration has been largely on 2 BHK apartments with smaller configurations averaging nearly 950-1,000 sf in 2015, from configurations averaging about 1,100 sf last year in Thane, which is typically seen to be a price-sensitive market, it added.
Thane saw the second biggest price decline in new launches after Goregaon. The weighted average sales price declined 18 per cent to Rs. 8300/sf in 2015 from Rs. 10,150/sf in 2013. As a result of both the efforts, the average ticket price of 2BHKs in Thane have fallen 18 per cent to Rs. 83 lakh in 2015, from Rs. 102 lakh in 2013, registering the steepest drop in ticket price among the other sub-markets under study in Mumbai, as per the Cushman & Wakefield report. Similar to Thane, Mulund has seen launch of about 4,200 units in the mid-segment. “This being a buyer-friendly market, has seen a steady increase in the launch prices which have risen by 7 per cent since 2013, however, smaller configuration of apartments have led to a decline in average ticket price,” it added.
Cushman said that the average apartment size in Mulund (2 BHK) in 2015 was recorded to be 1,055 sf, a drop of 10 per cent from an average size of 1,175 sf in 2013. This has resulted in average ticket size of 2 BHK apartments falling about 4 per cent to Rs. 129 lakhs in 2015 as compared to Rs. 135 lakhs in 2013.
Malad, which contributed about 11 per cent to Mumbai’s mid-segment launches since 2013, has also witnessed drop in price, the report said. The suburb also saw decline in terms of average ticket size over the past 2-3 years. “There has been a concerted effort in resizing the apartments and offer at an optimal price to woo buyers thereby leading to higher sales. Average apartment sizes in Malad have declined to about 1,000 sf I 2015, from 1,078 sf in 2013, while average sale price has fallen by 8% to 10,750/sf from 2013 levels. As a result, average ticket price is witnessed to have fallen 15% to Rs. 108 lakh in 2015, from Rs. 127 lakh in 2013,” it added.
“Select developers attracted strong responses to their launches, either on account of brand pull or attractive pricing, but many launches resulted in muted responses. This again highlights the pull towards select brands. The overall market still remains weak,” Kotak Institutional Equities said in a recent research note. The brokerage referred to the launches in the third quarter of FY16 or the festive season.
