Mumbai's Residential Market Expected to Rebound in Second Half of 2012

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According to a new report by Jones Lang LaSalle, the residential real estate market in Mumbai is expected to bottom by out by the second quarter of 2012.

Ramesh Nair, Managing Director of Jones Lang LaSalle India says, "We will see the beginning of a recovery in the city's residential real estate fortunes by the second half of the year. Meanwhile, there is very little scope for appreciation in under-construction projects. In fact, unsold under-construction stock will increase significantly. There is a lot of scope for strategic pre-launch bulk investment deals by HNIs who can predict where the market will head later in the year."

Currently, buyers are not expressing any interest in projects that are perceived to be overpriced, and this trend will continue throughout the first half of 2012. In this period, the city's residential market will be more or less sustained by the sale of affordably priced mid-income apartments. This absorption will be driven by both end users and HNI investors. However, completed high-end projects will become costlier by mid-year, largely because of reduced supply in this segment. The new DCR regulations would further impact new launches in the first half.

Nair continues, "The reduction of interest rates expected by the second half of the year will help kick-start a generalized - though cautious - recovery in demand for residential property, leading to an increase in launches. Many HNI investors would have perceived this trend and already parked their monies in advantageously located residential projects by well-funded developers. Their investments will be amply vindicated at this point."