The Indian real estate sector has been witnessing a revival of sorts in recent times courtesy several pro-active Government measures and these have naturally benefited the real estate sector in Mumbai as well. Affordable housing has been emphasized upon under the mission of Housing for All by 2022 and also the PMAY (Pradhan Mantri Awas Yojana) subsidies which have led to the growth of several such projects in and around Mumbai. Affordable housing is already generating higher sales and interest from homebuyers along peripheral zones and suburbs of Mumbai.
In addition, the Government has incentivized purchases of second homes courtesy measures like the increase in the TDS threshold to Rs. 2.4 lakh from Rs. 1.8 lakh previously and also the capital gains exemption up to Rs. 2 crore on two homes once in a lifetime for an individual. This will naturally give another spurt towards investments in second homes, particularly for earning rental income. Also, the GST rates have been slashed from 12% to 5% on under construction property in a major boost for the realty sector. Additionally, affordable housing units have witnessed GST rates coming down to 1% from 8% previously. These measures are expected to galvanize the sector not just in Mumbai but throughout the country going forward.
Mumbai’s real estate sector on an upswing
Mumbai looks set to enjoy several benefits in the future in terms of infrastructural growth and real estate growth alike. The city’s real estate sector will benefit from several big-ticket infrastructural projects including expansion of the Mumbai metro network, the coastal road, trans-harbour link and more. There is also the new international airport coming up at Navi Mumbai which will boost the realty market hugely there. Already, zones like Thane are witnessing a massive boost in terms of real estate growth. Thane is seeing premium projects coming up including Piramal Vaikunth Vairat, Lodha Amara and Rustomjee Urbana Azziano L Wing among others.
The same story is unfolding in areas like Panvel which are witnessing skyrocketing growth courtesy rapid infrastructural development and proximity to the upcoming Navi Mumbai International Airport. Affordable housing projects are expected to be developed in larger numbers in these areas and several other parts of the MMR (Mumbai Metropolitan Region).
Are realty prices coming down in Mumbai?
Mumbai’s real estate prices have always been like the phoenix; the moment you hear of them reducing or stabilizing, a record deal or two pushes them up to high levels again! However, on a serious note, prices of real estate in Mumbai have been largely stable or slightly lower over the last year or so in several locations. Yet, the costliest housing market in the country may be witnessing a reduction in prices in the near future.
In a good development for buyers, developers are lowering prices by at least 10% as per several reports and studies. Developers who are not getting access to sufficient funding and wish to clear inventory quickly are looking at lowering prices. Builders have to double their sales volumes at present in order to make things work. Hence, they will have to lower prices even more down the line in order to spark higher sales, clear out stocks and achieve higher liquidity.
The MMR (Mumbai Metropolitan Region) presently witnesses sales volumes of close to 70,000 units on an annual basis. 18,000 units out of this tally are sold in the Mumbai zone. The unsold inventory level has touched a whopping 2.80 lakh units in the Mumbai Metropolitan Region and 1.30 lakh units out of this tally are located in Mumbai as per several reports. Developers are now eyeing higher sales figures in the renewed environment where homebuyer interest has gone up and hence prices may have to be lowered in the near future.
Here are some other aspects to be taken into consideration:
- Builders have been impacted in terms of available funding courtesy the IL&FS issue and financial institutions have been subsequently unwilling to finance big-ticket projects.
- The introduction of RERA has already cleaned up the sector, increased accountability and tightened things since it does not allow developers to get payments from homebuyers without obtaining approvals.
- PE (private equity) funding is also difficult to get in the present scenario and comes at higher rates of interest.
- The Government has already done its bit for the sector and no other easing out of regulations is expected.
- These factors will lead to developers lowering real estate prices in Mumbai.
- Builders will look to mop up more funds from buyers by reducing property prices.
All in all, homebuyers are anyway riding high on several positive measures in Indian real estate and with a lowering of real estate prices in Mumbai, they may just be eyeing purchases in higher volumes in the near future. This will eventually boost the realty market in the coming days.