- The housing market in Mumbai Metropolitan Region (MMR) remained dormant registering no capital growth in Apr-Jun 2016, against Jan-Mar 2016. Unsold inventory soared to over 2.25 lakh apartments.
- A few suburban localities that garnered relatively better housing demand included Nahur, Dahisar and Boisar, clocking an average rise of six per cent, each, Q-o-Q.
- While Boisar witnessed some new launches by established developers in the last six months, Dahisar benefited from being a part of the residential development spree that has hit the Western Express Highway.
- Nahur gained from its strategic location between Mulund and Bhandup.
- Unlike the capital market, which struggled in the wake of rising unsold inventory and delayed infrastructure projects, the rental graph in MMR continues to be positive with a rise of two percent in the average weighted rental values in the last one year (Apr-Jun 2016 vs. Apr-Jun 2015).
- The evolution of Bandra Kurla Complex (BKC) as central business district, taking an edge over Nariman Point, has pushed rental demand in its neighbouring residential pockets. This has impacted rental rates in localities such as Bandra East, Kurla West and Santacruz East. ‘Ask’ rates in these localities have surged by 9-10 percent Y-o-Y.
- The release of fresh units in the luxury rental segment of Worli positively altered the average rental rates by nine percent.
- Residential market in Navi Mumbai remained inert owing to weak buyer sentiments, rising inventory level and no correction in property prices.
- Incessant delays in the implementation of multiple infrastructure projects including the second airport at Navi Mumbai and the ambitious metro rail project further contributed to economic and real estate stagnancy.
- Some localities that managed scoring a quarterly hike in property values include those along the MumbaiPune expressway such as New Panvel, Kalamboli and Kamothe. Easy connectivity and relative affordability could be the attributable factors.
- Localities such as Dronagiri and Taloja, suffered on account of under-developed infrastructure and recorded a downtrend in average property prices.
- Popular for its location attractiveness and livability quotient, rising property values in Navi Mumbai have compelled buyers to settle for rental options. This growing demand pushed the rental graph up by three percent in the last one year.
- Affordable locations along the Mumbai-Pune Expressway, such as Kalamboli and Taloja, continue to be the popular choices for rent. While the former registered a rise of 11 percent in rental values, Taloja posted a seven percent increase Y-o-Y.
- Improved connectivity via the Thane-Belapur Road bolstered rental demand in micro-markets along the stretch. These include pockets such as a Ghansoli, Airoli and Koperkhairane where rental values surged by 5-10 percent Y-o-Y.
- A slight price correction in the rental market of Palm Beach resulted in abrupt drop of eight percent in the ‘ask’ rates.
Thane and Beyond
- Thane continues to garner better demand than MMR and Navi Mumbai due to its comparative affordability. A quarterly analysis shows that 40 percent of the tracked localities in Thane recorded a rise in capital values Q-o-Q.
- Though humble, localities such as Vasind and Titwala posted a rise of six and four percent, respectively, in property values. The localities offer apartments within Rs 40 lakh.
- Teen Haath Naka registered a growth of four percent in the average capital values, primarily due to over-ambitious ‘ask’ prices by sellers.
- Localities along realty belts such as Patlipada and Ulhasnagar witnessed property values dipping by seven percent, each, owing to price correction.
- The rental landscape in Thane was robust with an average growth of three percent in leasing values Y-o-Y.
- Improved connectivity to Mumbai and availability of pocket-friendly residential options has made Thane a preferred choice for rented accommodations.
- Developing localities along the Ghodbunder Road such as Waghbil, Kasarvadavali and Panch Pakhadi continued to garner demand and witnessed a rise of 6-11 percent in rental values Y-o-Y.
- Waghbil recorded the highest rise in rentals on the back of increased demand and availability of new projects that offer amenities at a competitive price. Dombivli East, too, thrived on the back of a cost-effective rental market.
Demand and Supply Analysis
Muted growth in housing prices and a limited buyer base have hurt the investment rationale for real estate in Mumbai. This has kept seasoned investors away. To add further to the agony, despite restrained number of new launches, the demand-supply gap continues to be enormous.
By Property Type
- Mumbai recorded no changes in the demand and supply of different property types across zones in the quarter ending June 2016 as against Jan-Mar 2016.
- Buyers continued to scamper for apartment complexes with the category recording nearly 95 percent demand. In line with the buyer demand, supply in the market was heavily inclined towards apartments (97 percent).
- While buyers prefer buying in affordable locations in Thane and beyond, supply of apartments continued to be the highest in Navi Mumbai.
- Navi Mumbai housed 30 percent of the total market share of apartments, most of which were priced between Rs 60 lakh and Rs 1 crore.
- A glaring mismatch was noted between the supply and demand of residential properties priced up to Rs 60 lakh with the availability falling short of demand by more than 20 percent. Navi Mumbai witnessed the highest demand and supply for homes in this budget category.
- Homebuyers continued to elude luxury properties. Supply led demand by more than 10 percent for properties priced between Rs 60 lakh and Rs 1 crore. Inventory in the Rs 1 crore and above bracket also saw an oversupply of nearly 10 percent in the Apr-Jun 2016 quarter against the previous quarter.
- The Andheri-Dahisar belt saw the maximum demand as well as supply of luxury properties priced above Rs 1 crore. Northern suburbs have been witnessing increased buyer interest due to availability of spacious projects that offer luxury amenities at competitive prices as compared to the central parts of the city.
- The demand analysis for the quarter ending June 2016 clearly indicates that buyers are looking for smaller housing units due to snowballing capital rates.
- The 1BHK category witnessed the highest demand with nearly 55 percent buyer interest followed by 2BHK units with 35 percent demand.
- However, the inventory available in the market was found to be out of sync with the buyer demand. Supply of 1BHK units lagged behind demand by 17 per cent while an over-supply of seven percent for 2BHK units landed Mumbai in a paradoxical situation.
- Localities in Navi Mumbai and along the Andheri-Dahisar belt emerged as popular destinations for 1BHK and 2 BHK homes.
- While almost 15 percent of the total inventory for 1BHK units in Navi Mumbai was priced within Rs 40 lakh, majority of these units in the Andheri-Dahisar belt were priced between Rs 60 lakh and Rs 1 crore.
By Construction Status
- The supply of ready and under-construction units remained almost unchanged in Apr-Jun 2016 as against the previous quarter indicating a slow rate of absorption in the market.
- As observed in the last couple of quarters, ready units continued to form a major part of the residential inventory as developers held back new launches.
- Almost one-fourth of the total ready inventory was priced between Rs 60 lakh and Rs 1 crore. Under-construction units were largely priced within Rs 40 lakh.
- Fear of incessant delays compelled buyers to look for ready units, thus, tilting the demand graph heavily in favour of ready-to-move-in homes.
- Under-construction units captured only about 15 percent of the total market stock.