Why there are few buyers for luxury apartments in Mumbai
Looking for a luxury apartment in Mumbai? Due to skyrocketing rates of apartments in Mumbai, developers are facing issues in selling off the units quickly.
If you wish to own a luxury property in Mumbai, be ready to spend a fortune. Due to skyrocketing rates, inventories of luxury properties in the city are piling up as many buyers are waiting for rates to go down. As per the industry reports, approximately 5000 up-market flats in the city have no buyers.
Many of these plush homes cost approximately 10 Crore INR and above. As estimated, value of unsold luxury apartments in Mumbai is somewhere close to 50,000 Crore INR. There is not much activity happening in residential property market in central Mumbai as sales are quite tepid.
Sale of apartments with 4 and 5 bedrooms in areas like Mahalaxmi, Lower Parel, Parel and Prabhadevi is slow due to the skyrocketing rates. These units are priced at 10 Crore INR and above, costing 25,000 to 30,000 INR per square feet. In some posh areas, units in ready-to-move-in projects are priced at 65,000 to 80,000 INR per square feet.
Small residential units are in high demand
With residential units becoming unaffordable for many, buyers have now started gravitating towards smaller apartments (1 or 2BHK). Seeing this shift in trend, many developers are also reducing the sizes of the apartments to make each unit affordable for majority of buyers who belong to middle and upper-middle income group.
Many reputed developers are launching residential projects that offer 1 and 2 BHK apartments in Mumbai at affordable rates. They are not only reducing size of the houses but also bringing down cost of houses in some areas to get rid of piled up inventory. With a lukewarm response to luxury and ultra-luxury apartments, the small unit construction trend has caught up in Mumbai. Middle-income and upper middle-income buyers are in for a treat as developers are launching residential projects that fit their demand and budget.
Previously, real estate companies preferred constructing homes with large balconies and state-of-the-art amenities. Since rates of these units were exceptionally high, it became difficult for developers to sell of the units quickly. This led to piling up of inventory. Reportedly, there are as many as 1.69 Lac housing units in Mumbai’s metropolitan region that are still unsold. This number includes 59,000 unsold units from Mumbai.
Rates are being reduced to boost the sale of housing units, for instance, average cost of a 2BHK apartment has gone down from 1.32 Crore in 2014 to 1.29 Crore in 2015. According to the industry reports, first quarter of 2015 saw the launch of second highest number of residential units since 2010. Compared to 10,000 units launched in 2014, around 17,000 units were launched in the market in 2015. Majority of units have been introduced in markets like central Mumbai, Panvel, Dombivli, Kalyan and Mulund.
Besides launching smaller residential units, developers are also exploring outskirts of Mumbai for property development. For instance, areas in and around Navi Mumbai are witnessing development of commercial and residential units in the affordable price range.
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ABOUT THE AUTHOR
Martin works for a reputed real estate company in Mumbai that has launched various projects including luxury apartments and affordable apartments in Mumbai.