Realty takes another blow as buyers back out

The recent terror attack has dampened the already slackened demand in the realty sector. Several expatriates and visitors to Mumbai have kept their business plans on hold, hitting the sale and rental market in this segment.

Property consultants say NRIs and expatriates have deferred, if not backed out of, their plans to buy property in the country’s financial capital. Sandeep Sadh, CEO of Mumbai Property Exchange, says three of his clients, who were in the process of finalising deals last week, have now deferred their decision. “An expatriate employed with a multi-national company had finalised a high-end property in Bandra. But following the attack, his wife has decided to wait until January before going ahead with the deal. A Singaporean, who was planning to relocate to Mumbai, too has deferred his decision,” said Sadh. He is hopeful, however, that the affect on the economy will be short-lived.

Demand for property is down also in Colaba, which bore the burnt of the attacks with Nariman House, Taj Hotel and Leopold's Café having been targeted. “Business ekdum down hai,” said Chandu Naik, a local estate agent. He added that transactions were virtually nil once the share market started its downward spiral. “Now after the recent attacks, even enquiries have stopped,” said Naik.

Financial markets research group Macquarie Research has predicted that the terror attacks will also affect the demand for office and retail space in Mumbai.

“The sense of identification with Taj and Oberoi is very strong, not only for the business community but also for visitors and investors from foreign countries. We have not seen a more sombre mood,” said Anshuman Magazine, chairman and MD for CB Richard Ellis. He added that several visitors planning business trips to Mumbai have cancelled plans.

“This time the short-term impact would be much more than one would think. The risk perception has increased and none of the MNCs want any threat to the lives of their employees. The immediate impact will be seen on the leave and licence market. However, Mumbai is known for its ability for resurgence and over the next few months the mood will definitely improve,” said Magazine.

The impact has been felt also in the retail sector. A Morgan Stanley report looks at the impact in the weekends before and after the attack. Sales for Pantaloon’s declined 18 per cent in Mumbai while rising 10 per cent in the rest of the country. Shoppers’ Stop sales dropped 12 per cent in Mumbai against a 5 per cent growth elsewhere.