Expensive Mumbai Becoming Home To Affordable Units: PropTiger DataLabs

The fourth quarter (Q4) of the financial year 2016-17 (FY17) brought many a good news for the real estate sector. Home sales picked up, new project launches increased, too. As a result of which, the pressure of inventory overhang eased, according to a report by PropTiger DataLabs. But, that is not, there are many other noteworthy changes that took places during the quarter.  There are also things that would impact the future of property markets.

Real estate in Mumbai may have the distinction of being one of most expensive real estate markets in the world but there is no dearth of affordable options. According to the report, there has been a surge in launches costing below Rs 25 lakh in the Mumbai Metropolitan Region “on account of favourable policy measures by the government”. The region has also contributed the highest to the overall launches across nine cities in the below-Rs 25-lakh segment, the report adds. During the quarter, Mumbai was also the biggest contributor in overall home sale and new launch numbers across nine major cities.

The nine cities included in the analysis are Ahmedabad, Bengaluru, Chennai, Gurgaon (including Bhiwadi, Dharuhera and Sohna) , Hyderabad, Kolkata, Mumbai (including Navi Mumbai and Thane) , Noida (including Greater Noida and Yamuna Expressway) and Pune.

While there has been a 19 per cent increase in new launches in the March quarter over the quarter ending December, there is expected to be drop in these numbers in the times to come. According to the report, “with the Real Estate (Regulation & Development) Act, 2016, coming into force, new launches may witness a drop in the short term as developers may wait to see how the new norms turn out”.  “Developers are likely to face further cash crunch as the real estate law will prohibit the pre-launch sales advertisements before all necessary regulatory approvals are in place. Earlier, developers used to collect significant amount of revenues through pre-launch sales,” says the report.

The government focus on affordable housing is pushing developers to pay special attention to this segment, especially after an industry status was accorded to the segment in the Union Budget 2017-18. As a result, the share of affordable housing launches in Q4 has increased 22 per cent when compared to the same quarter previous year. “Both sales and launches are expected to improve in this segment, as compared with current levels,” the report adds.

Along with Ahmedabad and Hyderabad, Gurgaon registered the biggest annual increase in new launch numbers. This is a major change for a property market that failed to see much action in the past as far as projects launches are concerned. Owing to an expensive price tag, properties in Gurgaon failed to find takers, as a result of which developers have refrained from announcing new project in this market. Plans of building over 6,700 units were unveiled in the Millennium city during the quarter.

Continued project delays—we are expecting the trend to stop after the new law comes into force—resulted in home buyers going for ready-to-move-in flats. “Buyers inclination continued to be higher towards ready to move in projects. Around 18 per cent of the sales during the quarter were witnessed in such projects as compared to nine per cent in the same quarter previous year,” says the report.