Is Market for New Residential Properties in Mumbai Picking Pace
Real estate companies are launching various new residential properties in Mumbai. Demand for properties in Goregaon and other suburbs have also increased.
According to real estate reports, Mumbai will remain one of the hottest investment destinations in 2015 along with Bangalore and Delhi. Investors’ interest in Mumbai’s real estate sector has revised due to the central government’s plan of setting up smart cities in the years to come.
In last two years, ranking of Mumbai, Bangalore and Delhi has improved significantly in terms of real estate investment. As per the PwC report ‘Emerging Trend in Real Estate Asia Pacific 2015’, Mumbai climbed to the 11th position. In 2013 and 2014, Mumbai was at the 20th and 23rd position, respectively. With the expectation of an improved economy and a more transparent realty sector, more investors and buyers are entering Mumbai’s property market. Taking advantage of the current market scenario, developers are launching new residential properties in Mumbai.
There has been no significant change in commercial property rates in the city. Last year, demand for properties remained unchanged in Mumbai. However, this didn’t stop developers from launching new projects in prime areas and suburbs of the city, including Goregaon. Growing number of real estate companies are launching properties in Goregaon as it has turned into a residential hub.
How will Mumbai’s Real Estate Market perform in 2015?
As per the industry reports, property developers in India are facing the heat. They are dealing with high debts and in order to sell properties, they are offering discounts, gifts and free parking spots. Targeted at rich buyers, majority of projects in the city are luxury homes, priced at 1Crore INR and more. Luxury apartments have limited buyers but there is a lot of demand for affordable properties in the range of 5-20 Lacs. Due to lack of affordable housing and incapability of middle-income buyers to buy plush homes, many apartments remain empty, waiting for buyers.
If reports are to be believed, unsold inventory for reputed real estate companies in Mumbai stands at $8.5 billion. This doesn’t include residential projects that are in the pipeline. In 2015, some price correction is being expected because developers will be able to reduce their debt through the additional capital being brought in by the new FDI regulations. This might help some developers get rid of their debt and launch new projects.
Location-specific price correction will be seen in Mumbai this year. Only few prime locations will be able to demand good property pricing. For other locations, developers will have to reduce the rates or make it more attractive in order to sell the units quickly.
According to a real estate report by Knight Frank, property sales in Mumbai city went down by 9% in 2014. As per the report, the condition of Mumbai’s property market was comparatively better than the other five cities surveyed by Knight Frank. Absorption rate of properties in the second quarter of 2014 improved moderately. Experts are predicting that demand for properties will improve in the city; however, price growth has remained marginal in the first few months of 2015.
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ABOUT THE AUTHOR
Shruti works as a real estate agent for a reputed company that has launched various new residential properties in Mumbai and properties in Goregaon.