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Mumbai Insite Report Oct-Dec 2017

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Mumbai Insite Report_ Oct-dec 2017
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Market Movers

Govt. sanctions Rs 5,200 crore for infrastructure projects

The allocation of Rs 5,200 crore offered a whole new lease of life to the pending infrastructure projects including the Thane-Ghodbunder and the Bhiwandi-Kalyan elevated roads, Sion-Panvel Highway and Mumbai-Pune Expressway lane widening projects. Besides, the 25 km long metro line V and the 14 km long metro line VI also received a final nod.

Affordable homes’ supply surges under PMAY

Mumbai registered the highest number of new launches at over 19,400 in Jul-Sep 2017, with affordable housing segment bagging the maximum share of 10,000 units. The segment reported a whopping 300 percent rise in the units developed over the last one year.

High Court grants one year extension on project completion deadlines

The Bombay High Court’s decision to provide a year’s extension on completion deadlines for all real estate projects registered under Real Estate (Development and Regulation) Act, 2016 (RERA) has doled out immense relief to the developer fraternity. While the move will save developers from penalties, experts opine the leeway could trigger project suspensions and vex the homebuyer community.

Approximately 50 percent of MahaRERA projects get absorbed

Of the total units registered under MahaRERA, approximately 50 percent, i.e. 3.5 lakh units were absorbed by the homebuyer community. As easy access to all information on RERA website provided better performance analysis, increased transparency and greater accountability, more buyers were seen opting for RERA compliant projects.

99ACRES OUTLOOK

Mumbai at a glance_ Oct-dec 2017

Mumbai’s real estate market was testimony to a number of upheavals brought by a multitude of State and Centre level reformatory announcements and structural changes in 2017. Amidst the chaos and confusion, Maharashtra-RERA cemented the market with improved trust and transparency.

The residential market of Thane braved the tide of situational extremities such as increased demand for affordable housing amidst limited supply, and remained a preferred hub for under-construction homes priced within Rs 50-70 lakh. Mumbai and Navi Mumbai depend heavily on several infrastructure projects to see a real estate revival in the future. While Mumbai continues to be a hotspot amongst premium homebuyers, chances of a restoration in Navi Mumbai bank on recouping demand in mid-income housing category offering inventory priced between Rs 60 and Rs 90 lakh.

Offering additional legal teeth, while RERA smoothened the buying process and provided apple-to-apple comparison to buyers, developers in the city continued to reel under pressure. High operational costs and constantly changing norms, which forced builders to realign their business models, made sustenance difficult, particularly of premium home builders. Developers were either seen switching to budgeted products or refrained from new project announcements, awaiting the market to improve further.

Streamlining of approval process continues to remain unaddressed. With multiple approval levels, there is little scope for operational costs to reduce. Further, anticipation of limited price appreciation has resulted in shrinking profit margins, bringing the developer fraternity under stress. Naysayers foresee a similar trend in the near term.

 

MUMBAI

The last quarter of 2017 brought some relief to Mumbai’s housing market, which was in doldrums the entire year. Reduced fence-sitting syndrome amongst buyers backed by imbued sense of security and transparency helped the market inch towards consolidation. RERA-registered affordable housing projects grabbed maximum traction. The luxury market also hinted a revival, however, the demand was concentrated towards city suburbs owing to relatively lower capital ‘asks’.

Key Highlights

  • Marked by a series of reformatory events, though the year 2017 had a slow start, the market seemed to be stabilising towards the end with affordable housing segment driving Mumbai’s real estate. The city, however, did not report any substantial growth in capital prices this quarter vs. the previous one.
  • Reduced interest rate on home loans and increased carpet area under Pradhan Mantri Awas Yojana (PMAY) on MIG 1 and MIG 2 units from 90 to 120 sq m and 110 to 150 sq m, respectively, abetted the affordable housing segment to emerge as a rising star.
  • New launches remained restricted, however, as developers focussed on disposing existing inventory, the overall unsold stockpile radically reduced in Oct-Dec 2017.
  • North Mumbai, a focal point of infrastructure projects such as Coastal Road, Mumbai Trans Harbour Link, and Mulund-Goregaon Link Road to Dahisar East further connecting to Andheri metro corridors, remained an epicenter of real estate activities.
  • The infrastructural push around Andheri (West) propelled the market to emerge as the top grosser in Oct-Dec 2017, capturing an average capital hike of three percent, QoQ. Following the footsteps, popular localities such as Bhayandar (East), Goregaon (West) and Borivali (West) also mirrored a similar trend, with each reporting a two percent average capital growth over the last two quarters of the year.
  • Reeling under pressure, residential leasing in MMR grappled for temporary home seekers and reported only moderate changes in the average rental prices, YoY, across localities. However, popular micro-markets such as Ghatkopar (West), Worli and Wadala, saw rental hike of 4-8 percent, YoY, backed by proximity to commercial hubs such as Bandra Kurla Complex (BKC), and international and domestic air terminals.
  • Office space leasing garnered healthy traction than its residential counterpart. Although capital market remained muted, rental prices saw an upswing. Increased demand for quality office spaces against the inept supply, spiked the rental rates, principally in prime market of BKC. Besides, F&B industry also gained attention, especially in Parel and Worli belt.

 Mumbai capital and rental_ Oct-dec 2017

NAVI MUMBAI

Despite facing multiple challenges through the year, there seemed to be a silver lining on Navi Mumbai’s realty outlook in the last quarter. With government backed regulatory norms, real estate demand was seen building momentum in the region, particularly across affordable and mid-income segments. Recording capital appreciation in major micro-markets, QoQ, the landscape is poised for further growth in 2018.

Key Highlights

  • The resale segment in Navi Mumbai emerged as the worst-hit with sales volume at an all-time low in past many quarters.
  • Availability of housing stock on sale displayed some improvement in Oct-Dec 2017. Unlike sluggish supply in the preceding quarters, Q4 2017 witnessed the entry of new units from reputed industry players, who retuned to business with RERA compliances. Overall, fresh residential stock stood at around 10,000 units in Oct-Dec 2017. Panvel and Kharghar were the key areas that witnessed maximum inventory of new residential projects.
  • The soon-to-be operational Panvel-Belapur metro corridor remained a preferred stretch amongst homebuyers. Increased preference helped Panvel emerge as one of the top grossers in Q4 2017, reporting three percent average capital growth, QoQ.
  • Ulwe remained a flag bearer with a three percent capital hike, QoQ, on the back of the new railway line extension from Belapur, anticipated to commence in three months. On the contrary, the popular commercial hub of Vashi did not notice any change in average property prices this quarter, owing to relatively higher ticket size of around Rs 14,000 per sq ft.
  • Unlike Mumbai and Thane, the rental market of Navi Mumbai was testimony to improved demand from the tenant community in the quarter and recorded a four percent hike in the average leasing values. YoY.
  • Supported by several growth factors such as Navi Mumbai Airport, Seawoods-Ulwe Link from Palm Beach Road and SEZs, Ulwe also emerged as a top performer in the residential leasing market, bagging a seven percent hike, YoY.
  • Seawoods, second on the list, displayed a four percent growth in the annual rental values backed by an influx of new retail spaces. Increased demand for temporary accommodations from working populace remodeled the sentiment.

Navi Mumbai capital and rental_ Oct-dec 2017

THANE AND BEYOND

Tightening of regulatory norms revived realty sentiment in Thane, in Oct-Dec 2017. While economic uncertainty led to stalled enquiries, flattened sales and cautious investment sentiment, the overall market dynamics reported improvement this quarter. Resurging demand for under-construction units in the affordable segment also helped the market recoup, marginally.

Key Highlights

  • Notwithstanding reduced demand from the investor fraternity, Thane’s housing market remained buoyant in comparison to Mumbai and Navi Mumbai. Rising end-user interest, largely from the mid-income salaried segment, attributed to the market recovery, resulting in marginal growth in the average capital values, QoQ.
  • Improved transparency and greater accountability post RERA spiked housing demand, particularly in the budget category of Rs 40-70 lakh. Luxury segment buyers preferred Mumbai to Thane owing to better social and physical infrastructure.
  • Prevailing demand for under-construction units compelled builders to come up with projects offering new-age amenities. Overall, new launches in Thane and beyond stood at approximately 3,000-4,000 units in Oct-Dec 2017.
  • From the eastern region, Kalyan (East) emerged as the top grosser with a four percent growth in the average capital values, QoQ. Commercial expansion, coupled with affordability is ascribed to the area’s popularity.
  • Affordability and seamless connectivity to workplaces helped Ambernath and Badlapur emerge as key housing markets with capital values rising to the tune of 2-3 percent, each, QoQ.
  • Suffering on account of inadequate infrastructure, and low-ticket size projects, capital prices remained unchanged in Titwala. However, the market is likely to benefit in the long run due to neighbouring pockets of Ambernath and Badlapur reaching their saturation of developable land. Titwala is speculated to emerge as a future hotspot for real estate investment.
  • The rental market captured a mere 30 percent of the total residential enquiries in the region. Overall, the rental landscape did not post any significant growth in average ‘asks’, YoY. Well-connected locales close to commercial hubs garnered maximum traction from the tenant community.
  • The residential belt from Dombivli to Badlapur magnetised temporary home seekers on the back of affordability, presence of industries in the vicinity and proposed metro connectivity.

 thane capital and rental_ Oct-dec 2017

DEMAND-SUPPLY ANALYSIS

Improved supply of new housing stock on sale revived the drab under-construction sector in the quarter ending December 2017. Abridging the growing demand, multiple new projects dotted the peripheral stretches of the city. Ready-to-move properties also garnered traction, however, relatively less than under-construction units.

Key Trends

  • Mumbai demand supply graph1_ Oct-dec 2017Demand and supply imbalance continued to afflict the city’s realty sentiments. While units pegged at Rs 1-2 crore remained the most supplied, residential demand in the city continued to grow for apartments priced within Rs 60 lakh.
  • Barring low-cost homes and mid-income segment housing units, inventory glut across all budget categories continued to bother the developer fraternity. While the high-income segment did not record any change in overall demand, popularity of luxury and ultra-luxury properties dipped this quarter against the previous one.
  • Selling like hotcakes, affordable housing recorded a four percent hike in the total buyer preference, QoQ. The segment priced within Rs 40 lakh captured almost 45 percent of the market share. Increased carpet area under PMAY’s CLSS scheme and improved market sentiment helped magnetise buyers back to the market.
  • With the market getting acclimatised to several economic changes, demand for exorbitant ready units and resale properties has drastically reduced. Under-construction units regained some buyer confidence post RERA and recorded relatively better sales volume in the last quarter of 2017.

 Mumbai demand supply graph2_ Oct-dec 2017

 

Annexures

 Mumbai annexures_ Oct-dec 2017


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.


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  • Comments
  • Kiran Dhabugade February 23, 201812:52 pm

    Very useful report for property purchasers

    Reply
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