Demand for real estate will not end for a long time to come.
Current Trend in Realty Market in Mumbai in general and suburbs in particular.
The Residential Real Estate sector in India is witnessing a remarkable transformation driven by evolving consumer preferences, changing lifestyles and demographic shifts.
Let us look at Mumbai Real Estate Market which leads the Indian Real Estate. In my opinion, almost after 14 years Mumbai market have witnessed tremendous growth in terms of number of units sold, new projects launched and appreciation to pricing.
Year 2022 had the best enquiries for Real Estate Industry, since 2008. Let us understand the reason behind this growth; 2016 – Demonetisation, RERA, 2017 – GST, and 2020 – Lockdown. Covid-19 took the Real Estate Industry at absolutely ground level. During the lockdown the entire Real Estate Industry was in a state of shock and no one was able to predict the future and what it had in store for us and slowly people started spending more time at home during the phased lockdowns. As a result, people became more aware of the value of owning a home that can provide a sense of security and stability during such times.
As soon as the lockdown eased out people started looking for ready possession flats immediately and all the developers were keen to sell their stocks at 10% – 30% discount and hence Aug – Dec 2020 was the best time for buyers and developers. Also, the Government came forward to help by giving discounts on Stamp Duty, which was 2% from Sept to Dec 2020 and 3% from Jan – 31st Mar 2021, discounted BMC Premiums for builders to 50%. This discount not only helped buyers & developers but also the BMC who received a record sum on revenue in the year 2021. This discount in premium helped the developers to boost their sales. By the end of December 2021 not only all the ready stocks were almost sold out but appreciated the property price by 20 – 25%. Year 2022 saw the best growth since the last 14 years in terms of number of units sold and number of units purchased in Mumbai. The reason for this growth being that the Covid-19 pandemic has caused a shift in people’s attitudes towards homeownership, with many individuals now prioritising the purchase of a home over renting. After consecutive years of slowdown in the sector, last year witnessed unprecedent growth by reaching a new historical height in the commercial office segment.
Developers have been compelled to boost prices in order to stay competitive, risking losing clients as a result. This is in addition to house loans becoming more expensive. The cost of materials, which accounts for two-thirds of the total cost of building, has increased 32% since the end of 2019.
The actual price of buying a home, however, has increased significantly over the last three quarters. There are several causes for this. Rising home loan interest rates are a significant factor. Buyers had returned to the residential market as a result of historically low home loan rates. The average home loan EMI has increased by more than 18% as a result of the Central Bank of India (RBI) boosting the repo rate, or the rate at which it loans to banks, by 2.25 percent since May 2022.
Real Estate Market in 2023 and the near future
By 2023, organised retail real estate stock is anticipated to grow by 28%.
Mumbai, the financial capital of India, is one of the major contributors to India’s GDP. Currently, Mumbai is undergoing an infrastructure boom. With the development of metro, world-class roads, the upcoming airport in Navi Mumbai, Mumbai Trans Harbour Sea Link, Mumbai-Ahmedabad Bullet Train Corridor, Airoli-Katai Tunnel Road, Goregaon Mulund Link Road, Coastal Road, and many more, the bottom line is that all these long-awaited infrastructure projects will forever change the way Mumbaikars commute and escalate the economic growth of Mumbai and Maharashtra.
Luxury real estate remains a leading growth driver, after the lows of the pandemic, restoring buyer confidence. Previously, luxury homebuyers consisted primarily of UHNIs, HNIs, and NRIs. In 2023, it was anticipated that a rising number of first-time homebuyers investing in luxury properties due to favourable interest rates, more disposable income, urban living and millennials becoming the most important segment in the property market.
On the consumer front, there will be an increase in the number of people opting for intelligent homes or those looking to integrate technology that can make their life easier and help save their time and create more efficiency.
With increasing urbanisation from 12 to 30 per cent, the next 20 years could see more development than in the last 50 years.
Commercial real estate is seeing a positive uptrend with Grade-A developers heading to Andheri East, Powai & Goregaon. Moreover, the rapid commercialisation in recent years and the mushrooming of several office spaces and premium residential real estate have made these micro-market one of the most attractive suburbs to invest and live in. Also, once all the Metro lines are completely operational, not only will the quality of life of the residents improve, but commuting will also become much easier for office-goers working in Andheri, Powai & Goregoan.
Questions
- Do you think 2023 prices in Suburbs will go down as there is so much of supply coming in?
I see more supply as an opportunity for buyers to choose their dream homes from more projects. Yes, prices may not go up atleast for another 3-6 months’ time. You may see many discount offers in the coming days.
- How will the market respond to housing loan interest rate going upwards?
If you are an actual user, you should not worry about it, as you can see the last 10-20 years, there will be always ups & down in the interest rate as per the economy. Even this is not permanent. I am bullish for Real Estate and the coming 6 to 7 years are very promising.
