Is Mumbai real estate defying the slump- Here’s tracking encouraging developments from higher luxury real estate sales to stamp duty cut

7 min read

Is Mumbai’s real estate market truly defying the slump? Let us first delve deeper into what a market slump truly equates to. Mumbai is the costliest real estate market in India with property prices largely unaffordable across the luxury and premium property segments and a major chunk of the mid-range category as well. With the advent of demonetization followed by GST and RERA, the market witnessed a jolt like other major cities in India. Thereafter, the liquidity crunch has put several projects on hold while piled up inventory, particularly in the luxury segment, was another pressing concern for developers. Market recovery has been slow but steady, however, driven by Government incentives and sops, particularly in the affordable and mid-range segments. Additionally, the creation of a stress fund by the Government for completion of stalled and incomplete projects will boost MMR real estate markets to a large extent.

However, luxury real estate has been making a comeback of late across the MMR (Mumbai Metropolitan Region) while infrastructural projects like the coastal road, metro railway expansion and new Navi Mumbai Airport hold future promise of revitalizing real estate markets once again across multiple stretches. In the latest scenario, reports and experts have opined that Mumbai Realty Markets may be defying the slump in their own way. Here’s taking a look at some encouraging developments in the market (of which there are plenty) in recent times.

Handsome luxury apartment sales in South and Central Mumbai

Reports have indicated sales of 63 premium apartments worth approximately Rs. 1,800 crore across South and Central Mumbai over the last 6 months or so. This is heartening news for the Mumbai real estate market in a scenario where there is a shortage of buyers for big and luxurious apartment units. The prices of these units range between Rs. 50-78 crore as per reports and they include penthouses and duplexes as well. Studies also suggest that the most expensive property sold was a duplex unit spanning 9, 200 sq. ft. at Lower Parel’s Indiabulls Blu project. This apartment was sold for a whopping Rs. 78.3 crore.

There were two 5 BHK duplex apartment units that were also registered near Breach Candy at Bishops Gate. Both units were priced at approximately Rs. 66 crore. 5 apartments with price tags crossing Rs. 55 crore each, were sold in Worli at the 360 West project by Oberoi Realty. Supply levels, however, continue to be high for luxury apartments in both Central and South Mumbai. As of H2 2019, Mumbai was still the biggest luxury residential real estate market in the country.

Stamp duty reduced for Mumbai real estate by Maharashtra Government

The Government of Maharashtra has confirmed new proposals recently including the proposed concession of 1% on stamp duty for a period of 2 years along with other related charges that apply for registration of documents in zones under the MMRDA (Mumbai Metropolitan Region Development Authority). This move is expected to give a major boost to real estate transactions in Mumbai. The same concession has also been extended for Pune, Nagpur and Pimpri-Chinchwad.

The stamp duty concession will help in the growth of the real estate sector after a prolonged slowdown as per industry experts. This has also been seconded by Ajit Pawar, the Deputy Chief Minister, who also has the finance portfolio. He has also stated that Rs. 2, 78, 271 crores will be the cost of major infrastructure projects undertaken by the State Government. This is certainly another good development for Mumbai’s real estate sector.

Thakur Group and Wadhwa ink deal for joint development in Mumbai

 

In another major consolidation move by two leading real estate players, Wadhwa Group, based in Mumbai, has inked an agreement with Thakur Group. The two companies will be jointly developing a land parcel of 2 acres in the Kandivali area of Mumbai. The residential project that will be built on this plot, is expected to offer up to 350, 000 sq. ft. of development potential. Based on the agreement, development, construction, approvals, sale and design will be the responsibility of the Wadhwa Group.

At the same time, Thakur Group, which is the owner of the land, will have responsibility for getting the land title ready and cleared for development. Both companies are planning to provide apartments with 2 and 3 bedroom configurations with sizes up to 650 sq. ft. and 1,130 sq. ft. respectively. The TW Gardens project could garner more than Rs. 900 crore in revenues across 3.5 lakh sq. ft. of developed area.

The implementation of RERA and GST have led to major consolidation moves in the Indian real estate sector. Several developers are now seeking partners for joining development projects, JVs and some are even exiting projects. Developers previously looked to invest in building land banks for future projects and also picked up affordably priced land parcels in upcoming zones. With the regulatory environment undergoing a massive change, real estate developers have been tweaking business models to remain asset-light and more competitive in terms of costs.

Sunteck Realty garners fabulous responses for new launch

In another positive development for Mumbai’s real estate sector, Sunteck Realty Limited has received overwhelmingly positive responses for its newly launched batch of 2,000 apartments at the Sunteck MaxXWorld project in Naigaon. 1,800 apartment units have already been sold by the company. The project covers a whopping 15 acres and is the second developmental phase of a township project covering 150 acres in all.

The project offers 1, 2 and 3 BHK units for buyers and there will be 10 acres of open landscapes at the project as well. There are more than 50 amenities being provided by the developer at this project including a Central Park, swimming pool, amphitheatre, playing zone for kids, skating rink, birds pavilion, viewing deck, cricket pitch, and party lawn. There are several other facilities including food courts and fine dining restaurants for residents along with entertainment zones, a premier mall, high street retail stores, and a lifestyle clubhouse. The project is strategically located near the Juchandra and Naigaon railway stations while the upcoming metro 7 network and Bhayandar-Naigaon Sealink are also in close proximity to it.

Top developers looking to invest in luxury real estate projects in Mumbai

Several leading developers are looking to foray into luxury real estate in Mumbai which is always good news for the industry. Luxury housing projects are slowly but steadily making a comeback with developers competing more for drawing a small and niche section of affluent homebuyers in spite of mid-range and affordable housing units dominating the real estate sector overall. Prestige Group from Bangalore is planning the development of a signature luxury residential real estate project at Pali Hill in Bandra, one of the costliest locations outside Central and South Mumbai. This will be a smaller redevelopment project with high value as per the company. Projects in Central and South Mumbai continue to be the hotbed for the luxury real estate space in the city and its suburbs although buyers still prefer ready to move in housing units for mitigating risks.

Puravankara Limited from Bangalore has already commenced on its WorldHome luxury apartment collection. The first three projects will launch in Bangalore, Guindy in Chennai and Chembur in suburban Mumbai which is well on its way towards becoming a premium housing hotspot of the future with Godrej Properties launching its new luxury project here on the iconic site of the erstwhile RK Studios. Reports also highlight the growth of 8% in sales volumes for the segment between Rs. 1-2 crore for the quarter ending in September, 2019. 32% of the market share in this category was held by the MMR (Mumbai Metropolitan Region) for this period as per studies. Many other realty players are seeking quality land parcels in and around Mumbai for developing luxury real estate projects.

Piramal Realty, for instance, is currently looking for high-quality land parcels in South Mumbai and the western suburbs as well. The company has already opined that contemporary buyers in this segment do not wish to pay for additional space and any wastage and instead prefer contemporary and high-tech specifications and amenities along with premier quality in proportion to the space and price point. Piramal Realty has been successful in the luxury real estate segment, having garnered sales volumes of Rs. 3, 000 crore over the last couple of years from its projects in Byculla and Mahalaxmi.

BK Birla Group firm keen on expanding realty presence in Mumbai

Birla Estates, the real estate division of the BK Birla Group, is reportedly planning to scale up its market presence in the residential real estate space across Mumbai. It is also targeting expansion in Pune, Bangalore and Delhi-NCR with an overall investment outlay of Rs. 2, 000 crore for the next 2-3 years. A subsidiary company of Century Textiles and Industries Limited, Birla Estates will majorly focus on premier and luxury housing projects.

The company is seeking joint ventures, based on the location and quality across Mumbai, Delhi-NCR, Bangalore and Pune. Birla Estates will also continue developing its own land parcels in the meantime. The company has 200 acres in its portfolio, covering 40 acres across textile mill land in Worli and 45 acres in Pune along with 125 acres in Kalyan and 2 acres of land along the beachside in Prabhadevi, Mumbai. There is land owned by the Century Rayon subsidiary as well.

Avighna Group notches up good sales figures at its projects

Avighna Group has sold inventory of a handsome Rs. 350 crore at its Avighna 9 and One Avighna Park projects at Worli in Mumbai. The occupation certificate was recently received by the Avighna 9 project and 45 out of the 68 residential units have been sold here, one of Mumbai’s priciest locations.

The real estate developer will be further investing its earnings in another new project that will be developed in South Mumbai. Both the above-mentioned projects are part of the Avighna Estate at Lower Parel-Worli. The Group’s success in selling premier housing units augurs well for Mumbai’s luxury real estate market.

Record apartment transaction observed in Worli

Worli was witness to a record real estate transaction sometime earlier, being one of the costliest property locations in Mumbai. The Soi family from Mumbai paid up a whopping Rs. 111 crores, a new record, for two apartments in a luxury high-rise in the locality. Head of Radiant Life Care, Abhay Soi purchased the first apartment for Rs. 54 crore on the 36th floor of the Three Sixty West Apartments project along Dr. Annie Besant Road, Worli. The structure is still being constructed and will be India’s second tallest residential building upon completion, going up to 85 floors.

The second apartment was purchased on the 37th floor of the building by another family member, Taruna Soi. This transaction was concluded for Rs. 57.25 crore and both apartments may be transformed into a duplex eventually. The family will also get 10 car parks in lieu of their two apartments in the building. The stamp duty cost was pegged at Rs. 6.5 crores for registration. The Peddar Road-based family has indeed set a new apartment purchase record in Mumbai. Oberoi Realty is developing Three Sixty West which will have the Ritz Carlton Hotel and luxury residences managed by the hospitality brand. Kohn Pederson Fox, the noted American brand, is developing the buildings.

The residential towers will be providing amazing sea views all around while also ensuring higher privacy and discretion for residents. There will be numerous amenities spread throughout two entire levels at the building. These will include dedicated and demarcated areas for children’s activities along with fitness facilities and sports activities. There will be separate areas for relaxation, leisure and lounging alike while residents will get instant access to all the luxury facilities and services offered by the Ritz Carlton Hotel.

Looking at all these encouraging developments, it can be said that Mumbai’s real estate market is slowly but steadily defying the market slowdown. Luxury real estate markets are slowly making a comeback while there are several new projects and infrastructural developments in the offing that will galvanize the industry in the near future.

Sumit Mondal Content Analyst at Square Yards
Sumit Mondal Content Analyst at Square Yards