According to a report by brokerage and investment group CLSA, Mumbai’s luxury real estate market could see more decline. This comes as prices for super-luxury apartments in the city have reportedly fallen by 25-30 per cent over the last three to four years. Some sellers are reportedly taking losses of up to 35 per cent on their investment, indicating panic selling.
“While no material transactions have happened over the past two months due to the lockdown, our interactions with property brokers suggest price expectations by investors in large projects in central Mumbai (Omkar 1973, Lodha World Towers and Lodha The Park) have declined 10-15 per cent (Rs 7-7.5 crore for 3-BHK currently from Rs 8-8.5 crore pre-COVID),” the report added.
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The report also mentioned that major players like Oberoi Realty could take most of the impact of this economic slowdown. The past few years have been especially troublesome for the luxury real estate market. While the norm was that property prices would shoot up after receiving an Occupation Certificate from the authorities, it is said that prices have actually come down after the builders acquire the Occupation Certificate.
This indicates that fewer people are willing to invest in luxury properties at the moment. Furthermore, those who ended up buying these properties are now willing to take losses in order to sell it off in a hurry, otherwise known as distress-selling.
The coronavirus lockdown has impacted the economy greatly, although one believes that the lockdown was a necessary step to enforce social distancing and consequentially curb the spread of the coronavirus. Maharashtra has so far seen a total of 22,161 COVID-19 positive cases while Mumbai has reported 13,739 cases as of Monday.
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