Supply glut to keep realty prices in check

The residential property prices in the major metros are likely to stay rangebound in the next 12-18 months on account of increased supply and steep rise in prices in the last 12 months.

According to an estimate, Delhi's residential realty prices will go up around 5-10 per cent, while Bangalore and Mumbai may see prices increase by 7-10 per cent and 10 per cent, respectively.

Last year, the average increase in realty prices in the three metros was around 15 per cent. The projections, however, are for the medium- to high-end category, and the absolute values may differ.

"The capital appreciation for residential properties is limited to 6-7 per cent. So, investment in real estate with high return perspective may not be a profitable venture. On the other hand, capital appreciation of commercial spaces is close to 14 per cent. Commercial spaces also manage to attract a lot of investment," Sanjay Verma, managing director of Cushman and Wakefield, said.

Availability of new residential space is being seen as the key factor that will keep prices under check. "In Mumbai, fresh residential plots are available in Parel and Lower Parel and these will cater to the demands of the middle-income segment. Malad and Goregaon will add to the stock and bridge the demand-supply gap. There can also be a strong shift towards the north-western suburbs of Mumbai," Verma said.

Delhi is expected to witness a similar trend with a major shift to suburbs like Noida, Gurgaon and Faridabad keeping land prices in prime locations rangebound.

Meanwhile, Bangalore is showing a preferential shift towards the northern part of the city where the new international airport will be located.

"There is a palpable shift towards the northern area from the south-east corridor. This is having a stabilising effect on the prices, which will not breach the 7-10 per cent mark for the next 12 months," Verma added.