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‘Mumbai real estate market thrives amid end-user demand’
- Mumbai's real estate market thrives on strong demand, but experts at the Mint India Investment Summit 2024 say navigating rising house prices and project execution challenges is key
The Mumbai Metropolitan Region (MMR), India's most valued real estate market, is currently experiencing a surge in end-user demand, promising sustained sales momentum. This optimism, however, is tempered by concerns over rising property prices and project execution risks, according to discussions at the Mint India Investment Summit 2024.
In a session titled "The Remarkable Rise of Mumbai Real Estate," panellists shared a bullish outlook on the market's resurgence following a slowdown that spanned nearly seven years.
"There are homebuyers in every segment today. People after COVID understand that real estate is the real money and the real investment. The need to have a good house after the pandemic has been pronounced. The great growth in the economy has helped this," observed Vyomesh Shah, managing director of Hubtown Ltd.
Reflecting on the post-pandemic market dynamics, data from the Anarock Group indicated a 31% year-on-year increase in sales across India's top seven cities in 2023, with MMR leading the pack with around 153,870 units sold. This resurgence highlights the region's robust recovery and its dominant share in the national real estate landscape.
Pankaj Kapoor, founder and managing director, Liases Foras Real Estate Rating & Research Pvt Ltd, said Mumbai has the maximum number of high-net-worth individuals (HNIs).
“The demand has been towards upgradation of homes in the aftermath of the pandemic. People want to buy larger, premium homes. After a stagnation of seven years, property prices have become productive and they have started moving forward. There is increased consumer confidence because they know that builders will not default in the way it has happened in the past,” Kapoor said.
The panellists also underscored the significant role of premium and luxury projects in driving sales in the MMR, attracting interest from established developers both within and outside the region.
Prashant Thakur, regional director and head of research at Anarock Group, highlighted the post-RERA shift towards delivering projects on time and catering to the substantial pent-up demand from end-users.
Mumbai's real estate market ranked third in the Knight Frank’s Prime Global Cities Index for prime residential price growth in the last quarter of 2023, indicating a strong demand for lifestyle upgrades among affluent buyers, the primary driver behind the city's 10% price growth over the past 12 months.
Shah further discussed the nuances of affordability within the Mumbai market, suggesting that government policies on affordable housing must be adaptable to the diverse economic landscapes across different locations.
The discussion also touched upon the challenges faced by corporate entrants into the real estate sector, with Shah emphasizing the competitive advantage of locally established developers.
Kapoor added that while corporate developers have garnered a degree of trust, real estate remains fundamentally a local business, with project delivery quality posing a significant challenge.
As MMR leads in both sales and launches, surpassing regions like the National Capital Region (NCR) and Bengaluru, panellists called for a balanced approach to growth, mindful of the fundamental economic indicators and the risks of speculative pricing.
“Mumbai has been a disciplined market but we should not run ahead of our fundamentals in terms of pricing. Builder-led subvention schemes entice those buyers to enter the market, who may not able to sustain in the longer term and may not have the ability to pay. The long-term fundamentals, however, look good,” said Anarock's Thakur.
Kapoor said that there are both price correction and execution risks. While some builders in the past have not delivered what they have committed, prices are not expected to correct anytime soon given that they were stagnant for several years.
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Business NewsIndustry‘Mumbai real estate market thrives amid end-user demand’
First Published:30 Mar 2024, 12:27 PM IST
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