Metro real estate prices brace for correction

 Mumbai, Bangalore and Delhi are slated for a downward price trend in the next 24-36 months as close to 23 million sq.ft of new supply is coming into these cities. Mumbai and Delhi are expected to add 12 and 8 million sq.ft
while, Bangalore is expected to add 3 million sq.ft by the end of the year.

 With around 12 million sq. ft of new commercial space coming up in Mumbai, prices will move downwards in the medium term in Mumbai city. The office market in New Delhi has stabilised across  major business districts. The Bangalore market is expected to witness increased demand for build-to-suit facilities along the Outer Ring Road (Marathalli-Sarjapur-Hebbal) and also for small office spaces, especially in the CBD and off-CBD areas.

On the residential front, the report says that the recent free-fall of the stock market has dampened sentiment among purchasers. It points out that "The stock market index and property prices do not necessarily go hand-in-hand and the impact from any sustained volatility in the equities
market could have a bearing on property prices only in the medium term." It however does admit there is an element of speculation in the market "from investors who are seeking to ride the positive market sentiment especially during the initial phases of construction wherein investors enter the market at lower levels and flip assets as prices firm up when projects are nearing completion thereby gaining substantially."

 Chennai, Hyderabad, Kolkata and Pune markets continue to be driven by IT & ITES sectors. As a result, the demand for commercial office space is likely to continue to exceed supply. The mismatch will continue for sometime in
these cities. In Kolkata, expansion from major IT companies has resulted in even small plot owners developing office buildings suitable for IT/ITES
occupants. However, most of this stock is sub-prime.

The next couple of quarters will see an increase in the supply of IT/ITES buildings in the suburban districts. Given the state government's ongoing initiatives, the city is expected to witness more investments in the foreseeable future.