Mumbai: Mumbai witnessed a supply boost in the form of new housing units, resulting in a 10% QoQ increase in Q1 2021. But with the euphoria around the festive season subsiding and lingering economic uncertainty, there has been a contraction in demand by ~20% QoQ in Q1 2021, reports the latest Magicbricks PropIndex.
Developers have started launching projects, which were on hold since the onset of the lockdown last year amid a strained funding environment, and unavailability of resources. This increased supply was further supported by factors including a ~30% rise in search volumes during the festive season in Q4 2020, and a 50% concession in construction premiums payable by developers.
Magicbricks PropIndex also states that the residential real estate market is seemingly recovering from the impact of the pandemic and with buyer-search volumes moving upwards for both buy and lease ever since the festive season. A host of factors like reduced home loan interest rates, reduction in stamp duty, and discounts and deals offered by developers have made home-buying an attractive proposition in the country. In Mumbai, the spurt in the demand within the price bracket can be attributed to a slight price correction witnessed in the last few months. However, this price correction was also influential in raising the demand after the lockdown, majorly from the fence-sitters and investors.
Commenting on the PropIndex report, Sudhir Pai, CEO, Magicbricks, said, “The first quarter of the year 2021 has indicated a strong revival in the economy. The Indian economy is expected to grow by 10-13% in FY 22 as per predictions by various multilateral agencies. After the festive season euphoria, we saw rationalization of the surge in traffic volumes in some cities in Q1 2021. Various confidence-building measures by the central government such as liquidity infusion in stressed projects through the SWAMIH fund and RERA extensions have supported the sector when most needed. Reduced home loan interest rates along with cuts in stamp duties in some states have improved the demand.
From the price perspective, the southern region witnessed the most price increments in Q1 2021 in both under-construction and ready-to-move segments. We foresee the momentum gained in the last six months to continue across both supply and demand, backed by new launches tailored to the emergent needs of consumers and all-time low-interest rates.”
Proximity to IT and commercial hubs driving the demand in the suburbs in Mumbai. For the first time since Q4 2019, the share of 1BHK units in Mumbai among the total units searched was seen increasing. After witnessing a continuous decline in the share of 1BHKs searched from 45% in Q4 2019 to 29% in Q4 2020, it was seen rising by 5% to 34% in Q1 2021. The share of small and mid-sized apartments made up of 1and 2 BHKs contributed to 74% of the total demand in Q1 2021- up from 70% in Q4 2020. However, its supply remained constant at ~70%.
As per Magicbricks data, localities in the vicinity of employment hubs in the eastern and western suburbs, and priced between INR 15,000- 20,000 per sqft such as Vikhroli, Kurla, Goregaon, Malad, Kanjurmarg, Kandivali, and Borivali were the most preferred in Q1 2021, which made up almost 1/3rd of the total demand as well as supply.
Tax sops and lowered prices are upholding the positive market sentiment in Mumbai. The city witnessed a supply boost in the form of new housing units, resulting in a 10% QoQ increase in overall listings in Q1 2021. Developers have started launching projects which were on hold since the onset of the lockdown last year amidst a strained funding environment, and unavailability of resources. Prices of Ready-to-move (RM) properties remained flat at both QoQ and YoY level while the under-construction (UC) segment witnessed a marginal QoQ growth.
Also, to promote female homeownership, the Maharashtra Government has announced a 1% concession in stamp duty payable on the sale of property when registered under females' names. To speed up redevelopment projects, the state housing department has allowed developers to redevelop old cessed buildings by paying only 10% of the ready reckoner rate for the total built-up area proposed, to obtain NOC.