Inside India's Property Plummet

The residential market is still and listless. But prices have abated, and with builders desperate, home buyers can bargain and squeeze out a sweet deal.

- Ashish Sinha, Sunil Dhawan

The Americans will hate to admit it, but the real estate meltdown seems to have hit them too. After five years of marketing and engaging the best broking houses, they could not sell ‘Lincoln House’, the old US Consulate in Mumbai’s Breach Candy, at the reserve price they had set at Rs 850 crore. The worth of the sprawling three storey heritage mansion was arrived at with substantial ‘due diligence’. But there were no takers, till well-known businessman Cyrus Poonawalla bought it for Rs 750 crore, a figure substantially below its MRP!

Realtors, too, hate to admit it, but there is a bloodbath in residential real estate, especially in smaller tier-II and-III cities. The prices are down between 10-25 per cent across markets like Chandigarh, Surat, Dehradun, and Delhi’s Dwarka Expressway, and Gurgaon’s Golf Course Extension. There are bargains waiting to be snapped up for ready-to-move-in homes. In bigger markets like Delhi NCR, Mumbai, and Bangalore, builders are struggling to find home buyers. The pile-up of unsold stock has exceeded an estimated 7 lakhs units and is putting a big downward pressure on prices, according to a recent report by Knight Frank Property Consultants. With inflation coming down, the Reserve Bank of India is under pressure to cut interest rates to enable banks to offer cheaper home loans.

There is a caveat, though. Realtors and brokers working for them are holding the price line of their unsold units. Their message to home buyers is: this is the right time to buy a home because there won’t be any further drop in prices. The buyer is, however, sceptical and is continuing to delay a deal in the hope that prices will fall further. So there is stalemate, and a paralysis in the property market.