City Slips Behind Pune, Delhi in Home-loan Demand

High realty prices and lack of new projects in Mumbai keep buyers away     Mumbai has fallen by the wayside in the mortgage market rankings as record realty prices keep customers away, say real estate and home finance executives. Pune and New Delhi have overtaken India's financial capital with steady demand, while Mumbai has fallen to third or fourth position for housing finance.  "It used to be number one but there are not many new projects that sell in big numbers," said V Srinivas Rangan, exeutive director HDFC. "So, most sales are outside Bombay where the value is lower. We are witnessing good volumes from the northern market, especially the National Capital Region (NCR)."  In addition to affordability in the north, Mumbai real estate is seeing a slowdown due to lack of infrastructure and economic slowdown. With the financial situation worsening over the last couple of years, Mumbai — predominantly a banking and fiancial services oriented region — has lost its position. Apart from unaffordable prices, the dearth of new launches in Mumbai is a key reason for falling sales.  "Lending in Mumbai has come down. Prices have shot to unsustainable levels," said VK Sharma, MD and CEO, LIC Housing Finance. "The real estate market is  under stress. New projects are not coming up and existing ones are getting delayed. Also, with prices at this level, expectation of returns has also fallen." Most realty projects are in the services sector, especially IT and banking. The Mumbai market has been predominantly banking and financial services oriented. In other metros, a lot of the work is in distribution, marketing andback office. Also, real estate costs are very high in Mumbai. The type of rentals we pay for back office does not make any economic sense, added Sharma.  According to Jones Lang LaSalle India, Pune and Delhi-NCR continue to see good traction as these markets continue to be affordable and new launches are helping to keep the momentum. Of the total launches in Mumbai, NCR and Pune since January, around 60% were in NCR, 25% were in Pune and the rest were in Mumbai.  "In the Mumbai Metropolitan Region, sales momentum continues to be better in Navi Mumbai as costs are still affordable and launches are taking place there. However, in Mumbai itself the momentum is sluggish as there are no major launches except in Worli, Lower Parel and Prabhadevi," said Om Ahuja, CEO, Residential Services, Jones Lang LaSalle India.  Many developers in the city have revised and submitted their project plans to the civic authorities following the recent amendment in Development Control Rules. There's enough demand for the right products with the right price," says Ahuja, emphasising that if developers in Mumbai that are launching projects offer their products at the right price, customer response can improve.  Every year, the Pune market sees sales of around 57,000 residential apartments and most of these are bought by people who come to work there. In Gurgaon, this number can be 30% higher, and this average is being maintained as these cities continue to offer jobs, said property consultants. The job market in Mumbai, on the other hand, does not look quite as attractive in the current scenario, they said. A Fitch report said that demand for residential units continues to be dampened by affordability, high EMIs, the high level of property prices and stubborn inflation.  shilpy.sinha@timesgroup.com