Mumbai realtors to cut prices

Mumbai developers may cut record- high home prices to revive flagging sales after banks curbed credit to the sector, according to IIFL.

Registrations for home sales, leases and property transfers fell 15% this quarter from the three months ended September 30, the brokerage said in a note yesterday. "Selective price cuts" are expected in the quarter ending March, it said.

Real estate companies face rising borrowing costs and shrinking access to credit after a corruption probe into loans to some developers, according to Bank of America Corp.'s Merrill Lynch unit and Ambit Capital Pvt.

Lenders may cut back on funds to the real estate industry for the next three to six months, Merrill Lynch said in a note to clients on December 1. "Fresh lending to real estate developers by state-run banks is taking longer than in the past," Bhaskar Chakraborty and Avi Mehta,Mumbai-based analysts at IIFL ,saidin the note. "We see developers with debt refinancing requirement in the second half of 2011 increasingly coming under pressure to cut prices to monetize inventory."