So far, there has been a year-on-year decline in sales. How is the Mumbai market looking?
Starting from 2016 up to the Covid outbreak, Mumbai city sold apartments worth Rs75,000 crore, which is an average accepted number. In the first half of 2023 (January to June) alone, Mumbai sold Rs75,000 crore, what it used to sell in an entire typical year. What you are saying is comparing the numbers with 2022 data. Of course, there is not a big decline if 2023’s comparison is drawn with the year last. During post-Covid period of 2021 and 2022, people purchased properties due to varying factors like low interest rate, stamp duty cut, etc. It was a golden period for developers. Having said that, 2023 is looking like a slight decline of 6.5%. For me, it’s not a decline at all. If you look at the long-term average, the sales have doubled in terms of market size.
But, single-digit degrowth in numbers has been there for a few months now.
Which I think is very healthy. The way people were buying houses, developers will start demanding for a 10% price hike every quarter, if not every year.
Are you anticipating further hikes?
It’s already there. In south Mumbai, prices have escalated drastically. At one of the luxury projects in Worli, the developer increased the price by 50% after receiving the occupation certificate.
Such projects are for the Who’s Who. What about the salaried class?
Prices have gone up even in that section. It’s a simple economics of demand-supply. For the developer, it is a simple formula. Once 50% of the inventory is sold out, they will increase the price for every subsequent 10% of sales. The developer does not make money in the initial 50% of the sales. He is selling the first half of the inventory at possibly 10% of the margin. The real money comes at the last 20-40% of the sales.
Yet developers aren’t happy.
Developers will continue to cry for several reasons. First, they get butchered by the authorities; they have to keep approaching over 40 departments for approvals. Then, there are channel partners and homebuyers. The kind of negotiations people expect them to do is quite irritating. Even if I buy a home, I would have done the same thing to try to get the best value I can. If the developers don’t cry, no one will take them seriously.
From a data point of view, how do you see the affordable housing market in MMR?
If you see Thane, Navi Mumbai, Raigad and Palghar, the entire region has grown. Thane used to do sales worth Rs40,000 crore a year. Now it has minted Rs28,000 crore in just six months. So it has done very well, but not as much as Greater Mumbai. One of the reasons for this gap is that the starting price of apartments in Mumbai is Rs2 crore while it’s Rs60 lakh in Thane. Similarly, Palghar and Raigad used to do up to Rs7,000 crore worth of sales. The figure has risen only by 10-15%, but it’s not a bad number. With connectivity improving in MMR, it is helping people to commute and stay at these places.
Which are the emerging micro-markets in MMR?
Within Greater Mumbai limits, the stretch between Worli and Bandra is the best location for anything to do with luxury housing. This is because Bandra-Kurla Complex and Lower Parel are nearby, and have a lot of offices. The areas between these will see a lot of development.
In the mid-segment, Kandivali to Dahisar belt continues to be a preferred location due to its proximity to the Sanjay Gandhi National Park and the coastal belt.
If you go further for the affordable segment, the Panvel section will do better as compared to the Vasai-Virar section. Because you have got the biggest sea port while the international airport and Mumbai Trans Harbour Link are on the anvil.