#DemonetisationAnniversary: New launches down by 35% in Mumbai


  • Share on
Demonetisation story Mumbai

Demonetisation shook the Indian economy and made all businesses come to a standstill. The real estate sector, which is largely dependent on cash transactions, also received a massive blow as residential demand, supply and price growth suffered. On its one year anniversary, 99acres.com analyses how deep the currency ban move wounded the realty sector of the eight metro cities in India.

Last November’s surprise ban on 86 percent of the Indian currency in circulation relentlessly dented several industries – real estate being one of them. The metro cities were the worst impacted as thousands of homebuyers and investors were left in a lurch. Cash-strapped buyers withdrew from the market as ambiguities and other distractions took precedence. Mumbai’s realty landscape, which was already reeling under the pressure of stressed sales on account of unrealistic pricing and piling residential stock of almost 1.5 lakh units, received a major setback and almost immediately saw the sales volume trickling down. Reports indicated an almost 20 percent decline in housing sales in Mumbai alone in the first two months of demonetisation. In the next three months, transactions had almost hit a standstill as buyers struggled with disposable cash in hand.

Navi Mumbai and Thane witnessed region and budget specific lulls with peripheral areas bearing the maximum brunt of the currency ban move. For instance, sales for competitively priced homes in Navi Mumbai dried up and did not revive for months despite the progress in the ambitious Navi Mumbai International Airport project. Popular affordable areas of Thane such as Naupada, Panchpakhadi, Khopat, Kopri along with Vasant Vihar and Ghodbunder Road witnessed plummeting enquiries.

Demonetisation did not spare the luxury and ultra-luxury segments, too. Homes in this category across Mumbai, Navi Mumbai and Thane experienced a sudden drop in enquiries, site visits and transactions. Average weighted property prices in inventory-heavy housing pockets such as Vasai, Bhayandar (West) and Deonar in Mumbai, Palm Beach in Navi Mumbai and Vartak Nagar in Thane dipped by 4-5 percent in a month post currency ban.

As buyers slipped into a wait-and-watch mode, a few owners offered discounts up to 25 percent in order to dispose off their properties. This dwindled the average weighted prices in the secondary market by some margin. The primary market, however, did not see major price corrections despite muted demand. A five percent hike in Ready Reckoner Rates (RRR) in Q2 2017 could do little to thrust property prices, which had flattened by then.

Amid growing uncertainties and dampened sentiment, both buyers and owners shifted focus towards the rental segment, resulting in a notable hike in ’asks’. Areas close to the Central Business Districts of Bandra Kurla Complex and Nariman Point in Mumbai and Vashi and Belapur in Navi Mumbai witnessed maximum rental demand during the year. Connectivity via the functional metro routes, too, played an important factor in driving the rental markets of select localities.

The impact of demonetisation did not remain limited to the buyers. The construction frenzy in the Financial City died down almost immediately post the currency ban as developer’s coffers dried. New project launches hit an all-time low. Between January and June 2017, the supply of fresh inventory dipped by approximately 35 percent as compared to the same period the previous year. In addition to demonetisation, other factors such as the implementation of the Maharashtra Real Estate (Regulation and Development) Act (MahaRERA) and the Bombay High Court's stay on permissions to new projects over saturation of dumping grounds in the city were also at play here.

With the limited housing demand remaining confined to possession-ready units, the dip in new project launches helped the city marginally bridge the gap in the supply of under-construction and ready homes. However, multiple factors such as subdued buyer sentiment and uncertainties over key policy reforms –RERA and GST - the overall weighted capital prices have remained under check until now. Not surprisingly, Mumbai has failed to register any notable price appreciation in the last one year.

Market Analysis

Mumbai Story_demonetisation

Impact of Demonetisation

Primary Residential Market

The primary market was one of the first facets to bear the brunt of currency ban. By the end of 2016, Mumbai’s realty market stood with an inventory stockpile of almost 1.5 lakh units, which would have taken up to two years to be absorbed completely. Post demonetisation, the pace of housing sales dipped by a whopping 20 percent before hitting a rock-bottom in the next three months. The sales volume recorded for Oct 2017 is around eight percent lower than the same month last year. However, market has risen over the impact of demonetisation and is essentially subdued on account of ambiguities pertaining to MahaRERA and GST.

The peripheral areas of Navi Mumbai and Thane where land rates are still relatively lower have started witnessing a few project launches within the ticket size of Rs 50 lakh. While enquiries, too, have picked up pace, not many have converted into actual sales. Buyers’ wariness regarding timely completion of under-construction projects has spilled demand towards ready units despite the latter commanding a premium over the former.

Since the primary market constitutes a mere one-fourth of the total residential inventory across Mumbai, Navi Mumbai and Thane, fluctuations in its demand and supply have played a minor role in altering the average weighted capital prices, which have maintained status-quo with last year prices.

Secondary Residential Market

Capturing nearly three fourth of the total residential market across zones, the secondary market played a major role in bringing Mumbai’s real estate activity to a halt. As enquiries and sales hit a rock bottom, ‘ask’ rates of resale properties, too, crippled by an average of 20 percent in the short-term. A share of home owners opened up for negotiations in a bid to exit real estate investments. Another segment withdrew their sale listings and put their properties on rent with higher rental ‘asks’ in the wake of increased demand from the tenant community. This consisted of a section of prospective homebuyers who deferred their purchase decisions due to demonetisation and then waited for RERA and GST to unfurl their impact on prices.  

The Western and Central suburbs of Mumbai were the worst hit as maximum properties were priced beyond Rs 1 crore. Enquiries in the affordable segment (Within Rs 50 lakh) sustained in the peripheries of Navi Mumbai and Thane, however, did not translate into sales due to cash crunch in the first quarter of demonetisation.

The implementation of RERA in the second quarter of 2017-18 improved the general buying sentiment and increased the number of enquiries in the secondary market. While the city reported some sales in Q2 and Q3 2017, property prices continued to remain stagnant. Between Jul-Sep 2016 and the same period this year, average weighted prices in Mumbai and Thane have remained unmoved, while Navi Mumbai has witnessed a slight improvement to the tune of three percent.

Prices trends in the popular micro-markets of Mumbai


Current ‘ask’ rates*

Capital Growth**

Market Drivers

Andheri (East)



  • Poor buying sentiment amid growing stock

Bandra (East)



  • Exorbitant properties
  • Housing demand spilling over to affordable neighbourhoods

Ghatkopar (East)



  • Metro connectivity maintained robust housing demand




  • Proximity to Central Business Districts and metro connectivity thriving residential demand

Ghodbunder Road



  • Prime location helped owners and developers maintain housing prices

* Current ‘asks’ are median rates for listings in the respective localities posted on 99acres.com in Jul-Sep 2017 – both resale and new projects

**Capital growth is calculated basis the changes in average weighted ‘asks’, YoY – Jul-Sep 2016 vs. Jul-Sep 2017

Rental Market

The rental market has been a gainer on the back of muted buying sentiment triggered by demonetisation, which was stretched with the implementation of RERA and GST in the subsequent quarters. Deferred purchase decisions shifted buyers’ focus towards rented accommodations, especially to areas either proximate to the Central Business Districts (CBDs) or with connectivity via the functional metro routes. Affordability, too, continued to be an important parameter for tenants to choose the prospective rental location. As a result, Ghatkopar (West) and Mira Road in Mumbai witnessed the highest spike of six to eight percent in the average annual rental ‘asks’.

Navi Mumbai and Thane, too, registered hefty rental demand in areas offering accommodations at competitive prices. While notable negotiations took place in the rental landscape across zones, the overall price points flattened owing to excess housing stock. The average weighted rental prices in Mumbai witnessed a marginal positive movement in the last one year. Navi Mumbai and Thane saw prices growing by four and three percent, respectively, YoY.

Demonetisation rental graph mumbai


National Outlook

National Outlook_Demonetisation


Like other metros, Mumbai’s residential landscape, too, remained inert in the last one year. Subdued buying sentiment, reduced number of new project launches and almost stagnant property rates in both primary and secondary markets marked the real estate sector of the city. The effective and timely implementation of MahaRERA in Q2 2017, however, played the role of a market soother and induced some confidence amongst homebuyers. Even the festive season could not pull back the sector from the throes of an economic slowdown. However, the forthcoming quarters are expected to witness improved sales, especially for RERA-approved projects. 

Expert Opinion

By Ashish R Puravankara, MD, Puravankara Ltd

By Niranjan Hiranandani, Founder & CMD, Hiranandani Communities

By Aaron Solomon, Partner, Solomon & Co

By Saurabh Jindal, JMD, SVP Group

By Sanjay Jain, Group Managing Director, Siddha Group

By Arjunpreet Singh Sahni, Executive Director, Solitaire Group

By Pankaj Kumar Jain, MD, KW Group

By Mukund Patel, MD, Rutu Group

By Shishir Baijal, Chairman & MD, Knight Frank India

By Manju Yagnik, Vice-Chairperson, Nahar Group

By Aashiesh Agarwaal, Founder & Managing Partner, Pinakin Advisors LLP

By Anuj Puri, Chairman, ANAROCK Property Consultants

Disclaimer: The views expressed above are for informational purposes only based on industry reports and related news stories. 99acres does not guarantee the accuracy, completeness, or reliability of the information and shall not be held responsible for any action taken based on the published information.

  • Share on
Rate it 1 Star2 Stars3 Stars4 Stars5 Stars (1 votes, average: 1.00 out of 5)
  • Post a New Comment

Usage of 99acres.com to upload content which enables targeting by religion/community/caste/race is prohibited. Please report inappropriate content by writing to us at report abuse
Home Legal Sitemap Send Feedback
Back To Top