MUMBAI: Residential property prices in Mumbai increased by only 7% last year and a negligible 0.3% in 2013, said a report released on Monday.
The eastern suburbs from Kurla to Mulund saw an increase of 6% in 2014 and 5% in 2013 as land was still available to launch new projects. South Mumbai and the western suburbs between Malad and Borivli recorded similar increases. Bandra, Khar, Santacruz and Juhu also saw average price growths, as these areas lack a good supply of high-rises. Rates in areas like Thane and Navi Mumbai did not rise much either; the uncertainty surrounding the proposed Navi Mumbai airport did not work in favour of the satellite city, said the report by Jones Lang Lasalle (JLL) India.
Chembur and Wadala stood apart from the lacklustre trend in residential price growth. "The two suburbs saw a tremendous price increase of 58% and 50% in 2014 over 2013, thanks to completion of infrastructure projects like the Eastern Freeway, which connects Chembur to south Mumbai, and the monorail, which was in the news recently for all the wrong reasons," it said.
The report said even the average hike of 7% was primarily due to the development control (DC) rules that came into effect from 2013. Developers had to start paying for additional (fungible) FSI towards construction of lifts, lobbies, flower beds, balconies, etc, which had been FSI-free areas earlier. Other reasons for the increase in per-square-ft prices include the rise in ready reckoner rates and escalations in the cost of labour and raw materials.
"Home prices in the financial capital are evidently not submitting to inflation, which is affecting cost of living in most other respects. Of course, given the sluggish demand for homes owing to already crippling prices, there is not much scope for appreciation," said Ramesh Nair, COO, business & international director, JLL India.
The meagre increase in average property prices in the city stands in stark contrast to the general inflation rate of 6% in 2014 and 9% in 2013 (as per CPI data). "These figures definitely put paid to the popular perception that Mumbai's developers keep increasing prices despite the fact that inventory has been building up and housing demand slowing down over the last couple of years," said Nair.