Real Estate: Be Conscious Of The Price Rigging Price rigging is rampant in the Real Estate sector. Builders use brokers for under-taking fictitious bookings at pre-launches, then announce higher price to dump the same property on retail consumers. On unsold properties, the same nexus works-anounce one or two bogus transactions in say, a gated community and viola everyone has become rich in a matter of months. But the fact remains, no new apartments are getting sold, only existing properties are being sold to unsuspecting customers at much too higher prices. The thing is some wish to see the charade, some chose to ignore-at their own peril. Bombay Apartment registrations in Mumbai fell to 5,337 in May 2010, down 25% MoM, after 11 straight months of 6,000+registrations • The island city witnessed a 13% MoM fall in transactions, but thenumber remained robust at 1,000. Suburbs (Rest of Mumbai), on the other hand, witnessed a steep 26% MoM fall in transactions to 4,300.
• We believe this fall is largely attributable to the high property prices (prices in many areas are up 20-40% since October 2009), which have adversely affected affordability. • the rate of increase in property prices would abate. Mumbai registrations lowest since May 2009: months of 6,000+ transactions, Mumbai demand showed the first signs of faltering in May 2010. Apartment registrations fell 25% MoM to 5,337 in May 2010. While sharp increases (20-40% since October 2009 levels) in prices across the suburbs resulted in a 26% MoM fall in transactions in the suburbs to 4,300, apartment registrations in the island city remained healthy at 1,000 apartments (down 13% MoM). However, suburban registrations continue to outpace registrations in the island city. The entire YoY growth in Mumbai registrations in CY2009 was driven by growth in the suburbs. The same trend continues in YTD CY2010. Registrations data is a lagged indicator of demand (as properties are registered 2-3 months after the actual purchase), and hence we expect Safe Harbor Statement: Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints. Nothing in this article is, or should be construed as, investment advice. |
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