Real estate rates in Kolkata and Chennai didnt rise as rapidly as those in Mumbai, Delhi and Bangalore in the heady years of the boom. Now, as prices plunge in these cities, rates in the two metros arent falling as much, say international property consultants including the local arms of Cushman and Wakefield and Jones Lang LaSalle Meghraj.
The reason: better balance between demand and supply.
Between January and March, when real estate developers were reeling under the impact of the credit crunch and slowing demand, and property prices dropped sharply across the country, prices of new homes in Kolkata fell by up to 14% from September last year, whereas they fell by up to 35% in Mumbai and up to 24% in Bangalore, according to Cushman and Wakefield. In Chennai, too, the decline wasnt as sharp—prices fell by up to 18% but only in some neighbourhoods; in others, there was no change at all.
In Chennai, according to the consultancy, buyers are more sensitive to design and functionality than prices because of which developers werent forced to offer hefty discounts—like they were in other cities.
And in Kolkata, the prices didnt rise as high as they did in some other cities. In markets such as Mumbai and Delhi, builders overestimated the demand for residential properties, especially in the high-income segment, or properties worth Rs1 crore and above, said Kaustuv Roy, executive director of Cushman and Wakefield. This led to an oversupply of such properties in these cities and prices crashed. But that didnt happen in Kolkata.
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