Centrum Broking Pvt Ltd released insights derived from its research report regarding the Mumbai Real Estate Sector today. The firm anticipates a notable 30-35% decrease in residential property prices across India from their peak. Specifically, the Mumbai Metropolitan Region (MMR) is projected to experience a comparatively modest decline of 20-30% until April 2009. According to their analysis, the residential demand in Mumbai stands at 66 million square feet, juxtaposed with a supply of 55 million square feet. The report indicates that this drop in real estate prices within Mumbai will enhance affordability, consequently stimulating demand.
Several factors appear to contribute to the relatively smaller price reduction expected in the MMR:
Favorable Demand-Supply Equation: The unique geography and high population density of Mumbai result in limited land availability, making the demand for quality properties consistently exceed supply, thereby sustaining elevated prices.
Slum Rehabilitation and Redevelopment Opportunities: The extensive slum rehabilitation and redevelopment initiatives present lucrative prospects for real estate stakeholders, particularly since nearly half of Mumbai's twelve million inhabitants reside in slum conditions.
Strong Cash Flow Visibility: Developers focusing on the Mumbai market enjoy stable cash flow, enhancing their resilience against liquidity challenges.
Increasing Supply in Suburbs: The trend of suburbanization is continuously gaining momentum, with suburban areas increasingly catering to demand for small to medium-format real estate spaces.
Redevelopment Initiatives: There are substantial prospects in Mumbai's redevelopment sector. A survey conducted by the Maharashtra Housing Area Development Authority (MHADA) in 2006 identified approximately 19,642 dilapidated buildings ranging from 40 to 100 years of age in the city.