The Mumbai Metropolitan Region (MMR, including extended suburbs of Thane and Navi Mumbai) has seen muted single digit YoY price rise, owing to a high average ticket size of over Rs 12mn/unit deterring buyers since October 2012.
While Mumbai island city and suburbs have seen muted volumes owing to high prices and approval delays, the extended suburbs have seen decent volumes on the back of a number of large launches at below Rs 10mn/unit and relatively fewer approval delays. However, the extended suburbs also account for 67% of MMR’s unsold inventory of 176msf with far flung areas such as Panvel having large unabsorbed inventory. Further, tardy execution across projects in MMR has resulted in 50% of stock not having progressed beyond the plinth level.
"Our view is that developers will continue to offer discounts of 5-10% in the near term to boost volumes to cash in on improving sentiment and pent up demand in the festival season. However, developers will have to be prudent in not taking price hikes too soon and also focus on execution to curtail rising cost of construction," said HDFC securities in its report.
"We believe that developers with strong execution and branding will generate decent sales volumes. Hence, we reiterate our Buy rating on Oberoi Realty owing to its strong pipeline of launches across Worli, Mulund and Borivali," it added.
