Reasons for Increasing Property Prices in Mumbai

March 16, 2007	(Be the first to rate this story!)  Loading ...
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Real estate prices in Mumbai were believed to be going through the rooftop. The city has always been setting the trend for other cities to follow. However, what are the dynamics of property rates that Mumbai itself pursues?

Mumbai Realty is rampant with sharp speculations on the expected direction of property prices, with an equal possibility of the rates staying at current levels leaving the common man perplexed whether the rates will shoot up or come down.

There are several factors pushing the property prices in Mumbai. Talking about the past few years, the buying trend was on a constant mode, which resulted in easy availability of finance, low interest rates, better accommodation units, and relaxes construction norms. However, this sudden rise in Mumbai property rates can be justified in the wake of rising income levels, growth of service sector in the city that spawned large demand for quality commercial spaces.

Additionally, private equity and venture funds have also started to hold strong positions on real estate, thereby bringing huge chunks of investments into the property market. Then came the speculation regarding the large-scale plans by Indian and foreign conglomerates, which grabbed the real estate market in a frenzy of conjecture. The rise in property prices in Mumbai is also due to the failure of property developers to construct new areas fast enough to maintain the demand as well as the hikes.

Likewise, there are the factors that carry potential to moderate prices. They are the opposites of what have been mentioned as the key drivers above. What is more significant is that the prices are completely out of whack with the current global trends. The property rates have reached to such a level where services are no longer remained competitive.

Development activities are on a roll everywhere in Mumbai. The Bandra-Worli sea link is likely to come up with new areas on the Western corridor to access downtown Mumbai fast.

But the real benefit of this project is the encouraging prospects for the Trans-Harbour link, which will vastly increase the supply from the mainland to the hitherto land-locked paradigm of Mumbai. The provisions in the latest Budget proposals to withdraw Section 801b from March 2007, service tax of 12.5 per cent on lease rentals, and rising costs will dampen demand for residential property.

News Published Under:   Mumbai |