Commodity Online
MUMBAI: The heat of global financial slow down seems to have melted the real estate prices in the financial capital of the country, as the developers slashed the prices of properties to a record low.

During past few years, the real estate prices had swelled up to the maximum levels in metros and several other cosmopolitan cities. However, according to experts the price rise was artificial and temporary. The boom in the real estate sector caused immediate spurt in the prices of the construction related commodities including cement, Steel and ceramics. But with real estate prices cooling off in recent times, the cascading effect was seen in the construction related commodities.

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However, in the wake of the general election, the government infused huge funds for infrastructure development projects in the country. This gave some strength to the falling commodity prices, but the government support could not give a hold to the falling realty prices in the metros.

In an exhibition held at Mumbai by Maharashtra Chamber of Housing Industry (MCHI), the developers were offering apartments at 25-35% lower prices than the peak price. More interestingly, few developers were also selling residential apartments at 30% lower than the peak prices which were nearing completion.

In the commercial office space as well, few developers were offering at price points which were 25% lower than the peak prices.
There was a consensus that in the last 2 months volumes have improved due to new project launches at competitive prices. However, we believe this could be called a trend reversal (in terms of volumes and not pricing) if such encouraging volumes continue for the next few quarters as well.

However, developers opined that there had been better response than the in October 2008.

Amongst the listed space, DLF, Unitech and HDIL have launched residential projects at competitive prices in the last two months. With loan restructuring for most of the companies now over, investors will focus on the interest servicing capabilities of the companies.

However, leading realty stocks witnessed a steady rise in the stock prices. DLF Ltd and Unitech Ltd gained by over 40% during past one month, while HDIL Ltd surged by whopping 53% from its monthly low of Rs.63.45 during mid-March to Rs. 137.65 recently.

With inputs from Emkay Research

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