Indian real estate has been on a roller-coaster journey ever since the last few years, right from the advent of demonetization and RERA to GST and several other measures. While these measures have cleaned up the Indian realty sector and made it more attractive for end-users and investors alike, major Indian housing markets are still in recovery mode. Mumbai’s real estate market has been in the news for several big-ticket developments of late.
There are several new infrastructural projects on the anvil for Mumbai while connectivity improvements, development of peripheral and suburban areas and the popularity of affordable/mid-income housing projects throughout the MMR have contributed towards the revival of its real estate market. Yet, there continue to remain concerns about affordability in Maximum City since it is the most expensive property market in India. However, in some good news for prospective home buyers, property prices may witness a correction next year in Mumbai.
Market trends worth noting in Mumbai
The overall economic scenario may lead to real estate prices coming down slightly in 2020 for Mumbai as per reports. Prices remained largely stable all throughout 2019 in the city but things could change next year. The real estate market in Mumbai has always been associated with consistent price stability in spite of still possessing more than 2.21 lakh units in unsold, ready to move in inventory (as of September, 2019). In the last 10 years, Mumbai has already witnessed price appreciation of 12.7% as far as prime residential units are concerned.
In Q3 2019, Mumbai was at number 28 in the list of fastest-growing prime markets for residential real estate across the globe. It witnessed average capital values going up by 80 basis points annually while property prices continued to be at stable levels. As per several reports, Rs. 64,775 per sq. ft. is the average capital values for prime residential units in Mumbai, which automatically makes it the most expensive city to buy a luxury property. Appreciation in prices may reduce by approximately 1-2% next year in prime residential zones for luxury and prime units. These areas include the likes of Cuffe Parade, Lower Parel, Colaba, Napean Sea Road, Tardeo, Worli, Juhu, Santacruz (West), BKC, Prabhadevi and Khar (West) among others.
Some other aspects to keep in mind
Mumbai is at number 7 in lists of major global cities with regard to forecasted appreciation of prime residential units. Demand and sale may both reduce for these prime housing units in Mumbai although slightly while supply levels may come down a little more for luxury housing units in 2020. This year, prime properties have witnessed a slight cooling off in terms of price thresholds and there will be some depreciation in 2020, which could be good news for buyers in this category.
The extra 1% of stamp duty imposed by Maharashtra will naturally spur greater caution amongst prospective buyers next year. With this higher levy, 6% stamp duty is now charged by the State. From a global perspective, Paris and Berlin are expected to witness decent price growth next year along with Geneva, Miami and Sydney among other leading cities.
A correction in prices, however small, will naturally make prime or luxury real estate more attractive for buyers in this segment who will look for some relief after having to pay higher stamp duty. The luxury/prime property market has always been strong in Mumbai and will continue to remain so, albeit with more elbow room for buyers in 2020. On the other hand, mid-range housing units are the biggest trend as far as the MMR housing market is concerned. Several leading developers are shifting their focus to affordable and mid-range projects. Thane is blossoming into a coveted real estate hub with multiple projects while large-scale development is transforming areas like Panvel and Kharghar into major residential hotspots as well.
