The rising

<div class="section1"><div class="Normal"><span style="" font-style:="" italic="">Why are real estate prices soaring in an era of stiff competition? BT explores</span><br /><br /></div> <div align="right" style="position:relative; left: -3"><table cellspacing="0" cellpadding="2" align="right" border="0" width="44.2%"> <colgroup> <col width="100.0%" /> </colgroup> <tr valign="top"> <td width="100.0%" colspan="1" rowspan="1" style="" valign:="" top="" background-color:="" white=""> <div class="Normal"><img src="/photo/1004400.cms" alt="/photo/1004400.cms" border="0" /></div> </td> </tr> </table></div> <div class="Normal">At a residential complex in Malad, prices shoot up from Rs 2,900 to Rs 3,100 per sq foot in less than three days since bookings opened last week.It''s the same story in areas like Chembur, Wadala and Parel, where real estate prices have been soaring at the rate of 25-30 per cent. Even as new residential projects are launched daily, prices are still on the upswing. The question buyers are asking is, why the price hike when competition is supposed to slash rates? <br /><br />Real estate analysts say that the rise in the prices is due to the influx of investors, while brokers caution against the speculators who have invaded the city''s real estate market. The rise in the pricing is also being blamed on a coterie of stock market dealers who are now shopping for real estate. “Most residential projects are overrated. The highest risk is taken by banks who are partnering with the developers by offering them cheap loans to buy land,� cautions real estate consultant Ashok Narang. <br /><br />However others like Sanjay Dutt, director, Cushman & Wakefield, points out to the stiff competition between developers. “Everyone wants to buy land, which is still very expensive. There are some guys who are buying flats to rotate money, but the market forces will keep them away in the long run,� he assures. The demand for premium flats is seen across the city, since housing loans are easily available. “There are real users whose needs have changed. The demand for quality residence today is 10 times more than what it was in the boom year of 1995 (when property prices reached an all-time high), but the prices are not unrealistic,� defends Dutt. <br /><br />Developer Niranjan Hiranandani admits that the prices have shot up due to investors. “The pricing is affected since the availability of flats is erratic. Land is still held by policies like Coastal Regulation, Height Control and Urban Land Ceiling. Due to this developers have to wait for over a year and half to kickstart a project. When the supply will be smooth, the market correction will be observed,� he adds.<br /><a href="mailto:smita.deshmukh@timesgroup.com">smita.deshmukh@timesgroup.com</a><br /><span style="" font-style:="" italic=""><script language="javascript">doweshowbellyad=0; </script></span></div> </div>