Mumbai Real Estate – an Overview
The Mumbai real estate continues to be one of the oldest and a leading property market within the Indian subcontinent. If we focus on the residential real estate market of Mumbai, it continues to be marked as unaffordable by millions. Affording a flat for sale in Mumbai continues to be a dream that remains far—fetched for many Mumbaikaars and even the rest of Indians.
If we analyse the trends within the residential realty market of Mumbai, we will still figure out that transactions within the residential real estate market has been somewhat limited; despite that prices remained as high as they were. However, by 2013, a rapid pick-up was noticed with investments and sales figures going up considerably. Some builders have continued to offer deals and regulatory schemes in many housing development projects.
Key Observations of the Residential Real Estate of Mumbai
Some of the key observations of the residential real estate trends within the Mumbai realty market are as follows:
Mismatch of Buyers and Sellers with Price Expectations
Builders have noticed that slow progress in sales have largely been due to buyers losing out on their patience. This has been attributed to some peculiar sentiments of buyers associated with rise in price and may be the tag of unaffordability. In order to appease the customers and lure them to buy more of residential properties, developers have launched a scheme of 20:80 where the buyer is relieved of the burden of paying the Equal Monthly Installments (EMI). It is expected that such a move will increase the momentum of transactions to some extent. This policy yielded results, since the festive seasons of Ganesh Chaturthi and Diwali saw an upsurge in transaction of the property business.
Is Mumbai real estate market fraught with the condition of Oversupply?
Slow approval processes have characterized the residential segment of real estate market of Mumbai. One requires acquiring multiple no objection certificates from municipality to the environment board—making the overall process complicated and thereby slow. As per indianrealtynews.com, Godrej Properties and Lodha Developers could launch only one of its projects each. But, current reports say that the Maharashtra government has now taken up the initiative to approve projects faster. The government is also looking for setting up fast track environment clearance processes.
As per some amended regulations, balconies, voids and terraces will be counted under the Floor Space Index (FSI). This has led to dissatisfaction among the developers; some developers have to rework on their projects based on the new guidelines; according to most builders this will increase production cost and thus lead to an escalated price of apartments in Mumbai.
Effects on Mumbai Realty of Depreciating Rupee and Weak Equity Markets
As the rupee struggles to climb up the ladder, vis-à-vis the world economy, and the RBI continues to roll back its liquidity measures, such a move is bound to influence the real estate market to some extent. During a survey conducted, builders opined that the depreciating rupee is predicted to generate interest from some segment of buyers to the residential real estate market of Mumbai. A similar story is resonated by the Equity Markets; however a boost is expected to be seen in the forthcoming months.
Nonetheless, in a recent survey conducted on the residential segment of Mumbai’s property market, it was deduced that, cost pressures in terms of raw materials and land continue to remain strong. In June 2013, RBI had already sunk the risk of borrowings on residential real estate to 75% from 100%. This move is expected to provide some ease to the builders who can look forward to interest rates now.
Considering the recent trends and capital values dominating the Mumbai’s peripheral markets, the residential segment of the city is expected to remain firm and definitely ensure stable growth.
Sampurna Majumder writes on behalf of 99Acres.com, which is an internet portal dedicated to meet every aspect of the consumers’ needs in the real estate industry. The above post explores the real estate market of Mumbai with special focus on the residential segment.