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Mumbai Home Sales Recover From 30-Month Low on New Projects

Mumbai’s residential home sales recovered from a 30-month low in the third quarter as new projects boosted supply, according to Liases Foras Real Estate Rating & Research Pvt.

Sales in India’s most expensive property market rose 13 percent from the previous quarter to 9 million square feet, said Pankaj Kapoor, founder of Liases Foras.

“There have been some new project launches at the lower end of the price range in the last quarter, which have resulted in an improvement in sales,” Kapoor said in an interview in Mumbai yesterday. “Prices still remain at a record high though.”

India’s central bank, which has increased rates 13 times since March 2010, signaled it is nearing the end of its record tightening cycle in its policy statement on Oct. 25. The bank increased the repurchase rate to 8.5 percent from 8.25 percent.

An end to the rate increases may ease the liquidity squeeze faced by developers grappling with high borrowing costs and lower sales.

The city’s unsold inventory climbed to a record 110 million square feet, according to Liases Foras, a Mumbai real estate research company whose clients include Housing Development Finance Corp., India’s largest mortgage lender. The weighted average selling price in Mumbai climbed to a record 10,021 rupees ($206) a square foot, the data showed.

Recovery Ahead

Mumbai, Hyderabad and Bangalore bucked the trend of declining sales last quarter, while the National Capital Region, which includes New Delhi and surrounding areas, as well as Pune and Chennai, had a drop, Liases Foras said. All the six cities surveyed had an increase in selling prices ranging from 1 percent to 3 percent from the June quarter, the data showed.

“We may see some recovery in demand now that the central bank has indicated an end to the rate hikes,” Kapoor said.

Sales in Delhi and environs declined 18 percent to 18 million square feet in the quarter from the previous three months, while unsold units climbed to a record 221 million square feet, Liases Foras said.

The weighted average selling price in the capital city rose to 3,234 rupees a square foot, 3 percent higher than the June quarter, Kapoor said.

Sales in Hyderabad and Bangalore, in the south, rose 33 percent and 29 percent, respectively, the strongest in the quarter.

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