Property transactions in Mumbai and across the country will be affected in the wake of the terrorist attacks on key places in India’s commercial capital, industry experts said.
The terror strikes, which started late Wednesday and had not been fully controlled nearly 48 hours later, left over 125 dead and injured more than 250.
“The attacks will have a ripple effect on the volumes across the Mumbai city and the country,” said Pranay Vakil, chairman, Knight Frank India.
Developers are saddled with large amount of unsold properties in the country as the current credit crisis roiled markets across the globe, squeezed availability of money and caused investors to lose money. Earlier, the Reserve Bank of India’s (RBI’s) move to raise benchmark interest rates to control inflation had already slowed down purchases of homes by individuals.
The terrorist attacks come amid weakened sentiments about the future outlook as India’s economic growth is expected to slow down to less than 7 per cent compared with a five-year average of over 8 per cent. Indian software makers, who have been on an expansion spree and account for a substantial proportion of property transactions, have had to curb their businesses as the US and Europe witnessed a downturn.
The attacks are “going to add fuel to fire and will keep the sentiments subdued for a longer time,” said Anshuman Magazine, chairman, CB Richard Ellis.
Property transactions in Mumbai have dropped to a tenth of the earlier level, said Vakil. If a builder was selling 40 flats a month some time ago, the same establishment is selling only 4 now, he added. Similarly transactions in Delhi and its neighbouring regions and other cities including Bangalore, Gujarat and Chennai have been severely hit as the country’s economic growth slowed and the global impact led to job losses.
“Home buyers look for stability and if they see uncertainty they will postpone their decisions,” said Vakil. Several migrants who were planning to buy a home in the city are brooding over their decision. Migrants comprise about 40 per cent of Mumbai’s 19 million people.
Transactions by multinational companies are likely to be the most hit after the latest terrorist attacks. Several of the hostages in the plush Taj Palace and Trident hotels were overseas visitors.
“In the short term, there will definitely be a decline in business visits to the financial capital,” said Anuj Puri, chairman and country head, Jone Lang LaSalle Meghraj.
