April 24 (Bloomberg) -- Mumbai’s residential home sales recovered from a three-year low in the quarter ended March as new projects boosted demand, according to Liases Foras Real Estate Rating & Research Pvt.
Sales in Mumbai, India’s most expensive property market, rose 20 percent from the previous quarter to 9.13 million square feet, said Pankaj Kapoor, founder of Liases Foras, a Mumbai-based real estate research company.
“Sales in new projects has resulted in this spike in the Mumbai market,” Kapoor said in a phone interview from Mumbai today. “Still, the Mumbai market has moved into hibernation as record unsold units and prices are resulting in dismal sales.”
Kapoor estimates there were more than 150 new projects started last quarter.
India’s central bank cut interest rates for the first time in three years after raising borrowing costs by a record 375 basis points in 13 moves from mid-March 2010. The Reserve Bank of India lowered the repurchase rate to 8 percent from 8.5 percent on April 17. The outcome was predicted by three of 25 economists in a Bloomberg News survey.
The city’s unsold inventory, or the number of months needed to clear stock at the existing absorption rate, was at 40 months, Kapoor said. A “healthy market” normally maintains about eight months of inventory, he said.
Unsold units in Mumbai climbed to a record 129.55 million square feet, according to Liases Foras, whose clients include Housing Development Finance Corp., India’s largest mortgage lender. The weighted average selling price rose to a record 10,833 rupees ($205) a square foot, the data showed.
Apartment registrations in Mumbai fell 19 percent in the year ended March 31, IIFL Ltd. said in a report on April 18. Despite weakness in sales volumes, residential prices have risen as high as to 25 percent reaching a record high, said Bhaskar Chakraborty, an analyst at Mumbai-based brokerage IIFL.
Sales in the National Capital Region, which includes New Delhi and its surrounding areas, gained 36 percent to 30.99 million square feet in the quarter, Liases Foras’s data showed. The weighted average selling price rose to 3,570 rupees a square foot, 5 percent higher than the previous quarter.
Bangalore and Chennai, which posted the largest sales increases in the December quarter, had declines of 25 percent and 13 percent respectively in the March quarter, Kapoor said. Prices climbed 3 percent in Bangalore while Chennai recorded a 5 percent increase. Hyderabad posted a record decline in sales, dropping 57 percent to 2.64 million square feet.
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