If you have Rs 10-12 crore to spare and are looking for a home, you could hit the jackpot — and in South Mumbai, at that. Recent transactions in Mumbai’s property market point to distress sales and indications are that this season could prevail for a while.
Luxury apartments in the secondary or resale market are being sold for discounts ranging between 15 and 20 percent, which translates to a few crore rupees. Their sellers, typically High Networth Individuals and NBFCs, have begun resorting to steep discounts to meet liquidity requirements.
Lower Parel: 35 luxury apartments sold at 30 percent discount
Two weeks ago, 35 apartments at One Avighna in Lower Parel, were sold at Rs 11 crore per apartment through a block sale. The prevailing rate per apartment was Rs 15 crore. “Entire communities have begun coming to the market on the lookout for bulk deals,” says Ritesh Mehta, Senior Director and Head (West), Residential Services, JLL India, “The One Avighna deal saw these 35 apartments sold for a discount of between 30 and 35 percent. There are more in the works.”
JLL told CNBC-TV18 that two more premium-to-luxury projects in South Mumbai, built by two different developers, could be on the block in the next fortnight, with discounts of between 15 and 20 percent. “The deal is at the negotiation stage, and each of these apartments is valued between Rs 10 and 15 crore per apartment,” Mehta adds.
‘Demand is back in the resale luxury market’
The months following the COVID-19 lockdown have seen developers struggling to sell inventory. However, activity in the largely untracked secondary sales market has gone under the radar. Going by analysts’ projections, there is enough to suggest that demand is back in the secondary luxury property market, provided there is a sizeable discount for homes priced between 15 and 20 crore rupees.
“Buyers are expecting between 35 and 40 percent price-correction, while sellers are willing to part with 15 to 20 percent,” says Mehta, “So, if there is another 15-20 percent correction, we can see all-time highs in transactions.”
However, most analysts insist that it is not the developers of luxury projects who are in distress. “The distress has been coming in from retail investors who have bought homes a few years ago,” says Anuj Puri, Chairman, Anarock, “Since their own businesses are starting to suffer, they want to liquidate it.”
A significant number of these transactions, analysts say is also owing to off-loading of assets by NBFCs and lenders. “HNIs and super HNIs have bought their bungalows and high-end apartments against loans,” says Mehta, “So, there is huge stress on lenders to sell these properties at 15-20 percent discount. A large part of the selling is happening through lenders.”
The deal that started it all: Shapoorji Pallonji’s Worli sale
The deal that sparked off speculation that distress deals were on, was Shapoorji Pallonji selling its asset at Omkar 1973 — a luxury apartment bought nine months ago for Rs 9.6 crore — for just Rs 6.14 crore, two weeks ago. However, there is more to this than meets the eye. Anarock says the deal may not have been a distress sale in the first place.
“Omkar owed money to Shapoorji Pallonji for the work that the latter had done, in the building. In lieu of that, these apartments were given at a discounted price,” explains Puri.
Anarock helped Shapoorji Pallonji and Omkar arrive at the settlement in lieu of Omkar’s debt to Shapoorji Pallonji, which was closed by way of discounted sales of 13 apartments at Omkar 1973. “They (Shapoorji Pallonji) have sold it at the price that they had procured it, in their books,” Puri clarified, “So, there is no distress in the deal. Shapoorji Pallonji wanted to liquidate its assets and was keen on selling the property.”
Even before Shapoorji Pallonji made the sale on its Worli apartment, reports said that builder Haresh Mehta of Rohan Lifescapes sold his apartment worth Rs 20.78 crore rupees for a significantly cheaper Rs 16 crore rupees, for want of liquidity.