Market for Residential Properties in Mumbai is Booming
According to industry reports, the environment for real estate in Mumbai has been quite uncertain due to the global financial crisis. Rates of residential properties in the city have been going up despite reduction in the absorption rate. Issues such as lack of approvals, delayed construction work and high rates are being faced by home buyers who are eager to strike a good deal. Not just buyers but builders in Borivali and other areas are also showing desperation in pushing absorption of properties.
According to a report by Knight Frank (a global real estate brokerage firm), MMR (Mumbai Metropolitan Region) is witnessing a mismatch in demand and supply of residential properties in Mumbai. This mismatch has led to a pile up of 2.13 lacs unsold residential housing units. This report was for the office and residential properties market in MMR from January to June 2014.
Experts are of view that it will take approximately three years for selling all the units. They also feel that chances of rates coming down are minimal. Rates are not coming down because the property market in Mumbai doesn’t work on supply and demand. If the same amount of unsold inventory was available in any other metropolitan city, the market would have seen a 10-15% price correction but in Mumbai it doesn’t seem to be happening. City-based developers will not be willing to bring down rates.
Unsold inventory is mainly available in suburbs such as Dombivli, Navi Mumbai, Kalyan, Vasai and Virar. Compared to the first half of 2013, demand for real estate dropped in the MMR by 25% in the first half of 2014, as per the report.
Unsold inventory increased in Mumbai because buyers kept waiting for some price correction for most part of 2014. They were hoping that a stable government in the Centre would help revive the ailing economy of India. Deterioration in Indian economy in last 2-3 years also affected the residential property market in MMR. This is the major reason why there was a decline of 15% in new launches in 2014.
According to another real estate report, more than three dozen new projects were launched by builders in MMR in 2014. Demand is high for newly-launched properties regardless of the location.
In 2013, developers reduced prices up to 25% in the premium property segment. As per property consultants, rates in Thane, Navi Mumbai and nearby suburbs of central and western Mumbai have either increased marginally or been stable. Knight Frank said that residential property rates in south and central Mumbai areas such as Lower Parel, Mahalaxmi and Parel declined approximately 10% in three quarters of 2013.
Rise in interest rates and reduction in net profits in 2013 compelled developers to get rid of the inventory load. During January and September 2013, approximately 47,488 units were launched. This was a 28% reduction from last year. Even new launches were seen in Navi Mumbai and Thane. Properties priced between 75 lacs and 1 Crore were launched during September 2013.
Summary
Looking for residential properties in Mumbai? Builders in Borivali and other areas are launching new residential projects to lure buyers.