All you need to know about Mumbai's luxury real estate market

Luxury real estate in Mumbai is a sector in which prominent developers like the Dynamix Group are well-versed. Led by their able Director, Jayvardhan Goenka, also known as Jay Goenka, the Dynamix Group has long held the title of one of India's oldest real estate developments with many marquee projects under their belt. 

 

Even today, their vision continues to make a difference to Mumbai's skyline and the lives of thousands, thanks to the efforts of Jayvardhan Goenka – a third-generation entrepreneur currently overseeing everything from approvals and planning to business development. Jayvardhan Goenka has long foreseen the emergence of a new class of buyers taking the luxury real estate market in Mumbai by storm. 

 

According to reports, 13,000+ luxury homes were sold in the Mumbai Metropolitan Region in the first half of 2022 – the highest number in the country. This represents a significant 12% jump in the share of luxury housing in total sales, from 13% in 2019 to 25% in 2022.

 

This data clearly indicates a boom in Mumbai's luxury real estate market. Here are some more insights from Jayvardhan Goenka that further highlight the status of the market:

 

The slowdown from 2013 to 2018

According to Jayvardhan Goenka (Jay Goenka), events such as demonetisation, the arrival of GST, and the Real Estate Development and Administration Act from 2013 to 2018 put the luxury real estate market in Mumbai in a state of slowdown. This was further amplified by the NBFC Crisis and changes to Mumbai's Development Control and Promotion Regulations. As a result, new launches were put on the back burner for most of the period between 2019 and 2021. The priority was to clear the stock of oversupplied luxury residential homes in Mumbai and MMR at reduced prices. The average consumption in the same period was 29,350 units per quarter, and the inventory overhang has now been reduced to 17 months. 

 

Newfound enthusiasm is here, but customers can expect price inflation

The previously mentioned factors have resulted in increased luxury home purchases in Mumbai recently, mirroring the growth in the city's income and reduction in interest rates thanks to the government. However, the supply is now falling – with new launches not expected in the next 12-18 months, as per Jayvardhan Goenka (Director - Dynamix Group). Hence, customers can expect price inflation, partly due to the high demand-low supply dynamic and partly due to national inflation, the Russia-Ukraine war, rising developer costs, and increased raw material prices. 

 

Pre-pandemic investments will maintain robust ROI

Nevertheless, according to Jayvardhan Goenka, real estate customers who invested in luxury real estate during the pandemic or immediately after can expect fantastic returns. However, those investing in it right now, while still getting outperforming returns, can expect distress in the medium term if inflation persists. Rising inflation can dampen customer spirits and reduce disposable income, thus reducing overall demand in Mumbai's luxury real estate market. According to Jayvardhan Goenka, this trend can return the luxury real estate market to pre-2018 levels.

 

Relief could be on the horizon

Ultimately, as per Jayvardhan Goenka, the ongoing inflation can be transitory in nature and, once it ends, can restore the vibrancy of the luxury real estate market in Mumbai. Factors like reduced excise duty rate on fuel, reduced raw material duties, increased cement availability, and steel export tariffs can make luxury real estate development much more feasible and efficient. All in all, under-construction luxury properties in Mumbai remain as attractive as ever for all types of buyers. 

 

Jayvardhan Goenka believes buyers should not lose belief in the segment as FY23 will continue to make it more attractive. He advises buyers to stick to their investment despite short-term fluctuations – part and parcel of the sector.