MUMBAI: At a time when the economic slowdown has severely affected new launches in many property markets across India, Mumbai has seen the maximum launches in the first half of 2013. This shows without a doubt that the fundamentals of the city are still strong, making it a very resiliant property market. Even the NRIs prefer to bet on a matured market like Mumbai, compared to any other emerging market, due to the fact that the island city is the financial capital of the country. The overall realty segment of the city is shaping up well on the eve of the festival period and it is expected that the market will see more launches and transactions close to the upcoming festivals.
Facts speak for themselves: according to a report by Cushman & Wakefield, Mumbai real estate unit launches went up by 30 per cent in H1 2013. The report elaborates that Mumbai witnessed the launch of approximately 18,000 real estate units during the first half of 2013, representing an increase of 30 per cent compared to the first half of 2012. Of the total launches, 30 per cent were witnessed in the western suburbs of Mumbai, which had the highest share in new launches at locations like Andheri, Bandra, Malad and Goregaon. Navi Mumbai contributed 24 per cent of the overall launches, with the second phase of a large township project launched in Panvel.
Analysts are not surprised by such figures, even at a time when the general perception is that of a slowdown. Gopal Sharma, GMmarketing of Gundecha Builders, opines that Mumbai has seen the maximum launches in the first half of 2013 because in the last couple of years, the approvals of many projects were stuck since the BMC was planning to bring about certain changes in their policies; fungible FSI being one such change. All the major business houses and services industries have their presence in Mumbai, which provides people with opportunities to perform and grow with the market. The resultant continuous increase in demand for residential and commercial properties, leads to an increase in the property prices too.
“The NRIs, no matter where they belong, always prefer to invest in Mumbai because the appreciation one gets here can’t be expected in other markets. In the last 12 years, rates have gone up 5-8 times, depending upon the location, which is not seen in any other market. Although the market in general is sluggish, there will be an improvement in the sales figures during the festivals. In fact, there are already signals of such improvements since the last couple of weeks and it is expected to improve in the coming months because real estate is a segment in which buyers give a lot of importance to booking their homes on an auspicious day,” adds Sharma.
Traditionally, Mumbai has been witness to a booking windfall during the festivals. For the last few years, restricted supply and lack of new launches has been a real cause of concern. However, developers are planning many more launches this year and it seems that very soon, Mumbai realty will emerge as neither the buyers’ market nor the sellers’ market but rather, an equal opportunity market. Analysts believe that this is indicative of a matured property market, where there are opportunities for everyone.
Shveta Jain, executive directorresidential services, Cushman & Wakefield, informs that “The share of the high-end segments in new launches, has increased substantially despite stagnant demand levels in the city. It is largely due to aspects like high land prices and development cost that developers have chosen to go in for higher ticket size projects even while the demand is more for affordable and mid-end segments. The subdued sales activity has prompted developers to reduce configurations in order to cut ticket sizes, to boost sales.”
The first half of 2012 also saw a visible shift in product offerings of new launches. Contribution of the high-end segment increased substantially, compared to H1 2012. New launches in H1 2013 are concentrated in the western and central suburbs, where a number of high-end projects were launched. This is indicative of NRI funds finally pouring into Mumbai’s property market and also an overall increase in investors’ confidence in the segment. Moreover, this market has also defied apprehensions of any price correction. What instills even more confidence in investors, is the fact that the developers have been able to raise funds through other sources instead of reducing prices to increases sales.
Will Mumbai’s property market stabilise by the time the festive spirit catches up? Well, all indications suggest so. If that happens, Mumbai’s property segment will be a case study that defied the overall macroeconomic indicators. It may also be the driver of economic revival that gives an edge to developers in Mumbai vis-à-vis their standing with other property markets across India.