Property prices in Mumbai to fall by up to 15%

MUMBAI: Property prices in Mumbai are likely to fall by 10-15 per cent
over the next six to nine months on the back of lacklusture sales.

Leading real estate sector players attribute the impending fall to
rise in interest rates, escalation of cost, credit squeeze by banks,
bearish capital market and weak sentiments globally leading to poor
offtake of properties.

"These will definitely have a negative impact on the property prices
in Mumbai and other cities in the country. In my view, the price will
go down by 10-15 per cent over the next six to nine months," Indiareit
Fund Advisors' Managing Director and Chief Executive officer Ramesh
Jogani said.

On the positive side, it shows that markets are maturing and the fall
in price will again bring resurgence in customer demand, he added.

Indiareit Fund Advisors manages a total of $450 million domestic and
offshore funds.

His views were echoed by leading real estate firm Orbit Corporation's
Managing Director Pujit Agarwal as he said that there is a total
slowdown in the property market at the moment.

"For the last six months sales were lacklusture. The demand for
property will not go up until general election scheduled for next
year," Agarwal said.

High inflation, increase in cost of capital and widening trade deficit
have led to the fall in the stock market, he said adding that real
estate market of Mumbai has a significant co-relation with the stock
market.

"The wealth which had been created during the bull run of the market
has got diluted. This has led to cash crunch among the developers who
are now fighting to complete their project," Agarwal said.

International real estate consultancy firm C B Richard Ellis said
increasing lending rates, high inflation and unrealistic property
value in Mumbai have led to the fall in prices since the last
quarter.

"People are also prefering now to wait and watch before taking any
decision on buying properties. Oversupply is also there. In my view,
prices will fall by 15-20 per cent in a year or two from now," Rajesh
Prasad, Head, Transaction Management Group, CB Richard Ellis (India)
said.

CB Richard Ellis Group, a Fortune 500 company headquartered in Los
Angeles, is the world's largest commercial real estate services firm
in terms of 2007 revenue.