Mumbai Property Registrations Surge in April 2024
Mumbai witnessed a significant surge in property registrations during April 2024, reaching a total of 11,504, and injecting over INR 1,043 crore into the state's coffers, according to a Knight and Frank report. This positive trend, complemented by a 16% rise in revenue and stable ready reckoner rates, has instilled optimism among real estate developers in the Mumbai Metropolitan Region (MMR). Developers anticipate strong sector growth, particularly concerning larger property acquisitions in areas where enhanced connectivity, brought about by infrastructure projects such as the Mumbai Metro expansion, Mumbai Trans Harbour Link (MTHL), and Coastal Road implementations, has addressed prior accessibility challenges.
Developers' Optimism and Projections
Prashant Sharma, the President of NAREDCO Maharashtra, articulated the optimistic outlook stating, “We are optimistic about the future of the real estate sector in MMR.” The National Real Estate Development Council (NAREDCO) Maharashtra anticipates robust growth projections, attributing this positive trajectory to several key influences. Sharma elaborated that burgeoning demand for residential properties in the affordable and mid-segment categories is a positive indicator and additionally points to a resurgence in commercial real estate driven by the IT and finance industry expansion.
Sharma further explained that, “Moreover, government initiatives such as the relaxation of FDI regulations and the emphasis on infrastructure development, including the expansion of the Mumbai Metro, Coastal Road, and several other projects, making real estate investments even more appealing. We are also aware of the challenges, which include regulatory hurdles and the need for faster project approvals. However, with the state government’s commitment to improving the ease of doing business and our collaborative efforts to advocate for policy reforms, we are confident that MMR will remain a vibrant and dynamic market for real estate investment.”
Resilience of Residential Real Estate
Manju Yagnik, Vice Chairperson of the Nahar Group and Senior Vice President of NAREDCO, Maharashtra, emphasized that the residential real estate sector stands as a resilient and lucrative prospect for investors with moderate to low-risk tolerance. Despite facing several headwinds, this segment has consistently proven itself as an attractive option. Yagnik also highlighted that residential properties present a more attainable entry point in contrast to the often substantial initial investment associated with commercial properties. The relative affordability of upkeep and hands-on management favors residential investments, making them attractive, particularly for those working with a tighter investment capital pool or less experience with property oversight.
Market Corrections and Emerging Trends
Nitin Singhal, co-founder of PropFina, notes that with current amplified supply levels across several micro-markets, there is a strong prospect for market corrections arising from highly leveraged players. Singhal elaborates that: “Those [players] who have financially engineered their project portfolios and maintain control over their brand will have the least impact. Corrections can range from 10-15% and will be specific to micromarket dynamics. There could be higher offtake in areas where connectivity issues are being resolved.”
Growth in Commercial and Warehousing Sectors
Singhal also observes that the commercial sector, encompassing retail and office spaces, is flourishing, marked by decreasing vacancy rates and upward pressure on lease prices. Singhal explains, "Introducing small and medium real estate investment trusts (SM REITs) creates a significant secondary market absorption opportunity", implying positive market momentum. Singhal further predicts an increase in certain land prices stating, “Similarly, major warehousing players are quickly acquiring the land parcels, some of which are backed by sovereign funds seeking safe havens with higher-than-inflation returns. Clear title land parcels ranging from 50 to 100 acres will see a rise in pricing, particularly along Samruddhi Mahamag exits, DMIC Virar-Alibag Multi-Modal Corridor (VAMMC), and so on.” He envisions developing into a new segment with multi-level last-mile connectivity warehousing.
April 2024 Consumer Trends
As per Knight and Frank, April 2024 revealed distinct consumer preferences in property acquisitions. According to data from the Maharashtra Department of Stamps and Registrations, apartments under 500 square feet were particularly popular, comprising 45% of all registrations. A sizable proportion, corresponding to 86% of Western suburb buyers and 92% within the Central suburbs, opted for properties within their existing micro-markets for the familiarity they provide and availability of options aligned with their budget and amenity requirements.