There have been repeated media reports and off the record statements from industry insiders that the Mumbai residential market may be slipping into a free fall.
Q: What’s your reaction to reports that say residential real estate prices may fall rather sharply in Mumbai?
Godrej: No, not at all. I think the demand continues to be strong. All our projects are selling well. I have also not heard anybody say what you mentioned. There might be some price corrections in certain market from the very high levels they had reached. But, overall, there continues to be strong demand.
Ofcourse, if there is talk that the prices are going to come down, if more and more people discuss such a thing then people do stay away from the markets for a short while. But I think the demand continues to be strong. In all our projects, we are selling quite well. Infact, we feel Q4 will be a very strong sales quarter for us.
Q: The view is that house prices could correct by 30-35% in Mumbai, you are not in that camp, right?
Godrej: I wouldn’t like to comment because I am not familiar with that situation.
Q: The view is that if one is planning to buy a house in the key metro cities, good news is coming our way because there has been a fall in home sales, by almost about 50% already and some more of a fall is expected. What is your commentary on that? Are you expecting to see that steep fall of almost 35% or so?
Agarwal: I wouldn’t say 35% or percentages. When you are talking about inventory piling up, we have got to see it in the right perspective, which is that where is the production. The production is stalled, the permissions are not there, and the stop work notices are being issued. So, the supply side is getting squeezed dramatically. So, I wouldn’t say there is stock build-up. But, yes, whatever stock is under production, there is some amount of pressure over there. Thirty-five percent, I don’t think so.
Q: The hurt is supposed to be more in the luxury segment, there are people who are seeing that the volumes of sales have fallen by 70%, anything you have heard on that?
Godrej: We have seen some of the resale in some of our projects. We don’t have inventory to sell. But some of the resale prices in some of our projects continue to be high.
Q: Do you see more hurt in the luxury segment?
Agarwal: On the contrary, I think the luxury segment is where there is not more hurt. There is hurt in big ticket segment; say in Central Bombay, if you are talking about a product which is costing Rs 10 crore and above, there is hurt there. But if the same product at Rs 25,000 a sq ft, ticket size is smaller, the flat sizes are smaller, I am still able to push that out at Rs 25,000. So, therefore, if ticket sizes are below Rs 5 crore, I am not seeing any hurt over there.