Introduction
The boom in Mumbai real estate ends in early 2023. Mumbai saw a slowdown in real estate in the February 2023 column. After that, sales were at a steady run rate of an average of 10,000 registrations per month. About 25 percent of these are redevelopment units. Expectations are high for the October–December 2023 festival season. However, it did not meet real estate expectations.
Table of Contents
Mumbai Real Estate Prices: Several micro-markets witnessed a 5X increase in the number of launches between August 2020 and December 2022 due to increased demand for housing. In a credit-deficit market like Mumbai, selling under-construction projects is always a challenge.
But this is compounded by high competition and increased prices. In an industry that relies heavily on customer advances to fund around 40–50 per cent of project costs, individual builders are likely to sell fewer units per project.
Mumbai Home Buyer Has Low Expectations
As harsh as it sounds, the average Mumbai home buyer has low expectations. He wants a lot. But he knows that expecting anything more than a smooth delivery of his home is unrealistic in most cases. Branded players give hope that all their dreams will come true in time. Hence, branded players in lower markets can thrive even at higher prices.
Example: Godrej project in Raj Kapoor bungalow plot in peaceful Chembur, Rustomji sea facing project at the Bandstand (Bandra), etc.
In micro-markets that are competitive, branded players will need to price attractiveness to garner sales. On the other hand, developers without credible records and histories will struggle to sell their under-construction units, even at lower prices.
Luxury Market Collapsed
‘Luxury’ is a misused word in the real estate business. And at no other time was it abused to the extent it is today. A luxury project means at least Rs. 8 crores or nearly a million dollars with a ticket size. Even assuming one, there are many options, from many first timers to very few buyers.
Moreover, ticket size alone does not define ‘luxury’. It looks at the combination of house size, plot size, design, amenities, finishing, etc. This is elusive for the majority of players. Property consultant Vivek Bhatija said “More than 50 percent of the projects are not luxury, but fake luxury projects, which are off the market. They need a 20 percent price cut to attract buyers.
Slow Project Acquisition
It would be an understatement to say that project acquisition by builders has been hot in recent months. Developers have gone all-in, making generous offers for land acquisition, especially in the redevelopment market.
Small and mid-size players are treating the current cycle as their opportunity to jump into a higher orbit. Many builders are doing more projects today than they have in their entire careers. With the market slowing down, project acquisition will moderate, although I suspect that land prices will not.
Conclusion
Mumbai’s real estate boom will end in early 2023. Despite high expectations for the October-December 2023 festival season, disappointment remains. Investments are slightly down. As more residential houses are built, the prices are likely to decrease. For more information, visit Openplot.
Also read: Delhi Development Authority: Bookings Open for 10,000 Ready-Made Flats