5% drop in sale of homes across Mumbai Metropolitan Region
The effects of the slowdown continued to reflect in the real estate market in 2019, when property sale dipped across the Mumbai Metropolitan Region (MMR).
In 2019, sale of residential sector was 5% less than 2018. The number of homes sold in 2019 in MMR fell to 60,943 units compared to 63,893 units in 2018, according to a report released by real estate consultants Knight Frank India.
The report said the half-yearly sale also declined in the last six months of 2019. In the last six months of 2018, the number of sales was 31,481 units whereas it was 27,212 units during the same period in 2019. However, the number of launches increased in MMR in 2019 as compared to 2018. In 2019, there were around 79,810 units launched in MMR as compared to 74,363 units in 2018 — registering a 7% increase.
While the overall launches have gone up, but they underwent a correction in the past six months of 2019 when data of past six months of 2018 is compared.
The real estate consultant feels launches remained high because of optimistic and speculative behaviour of developers.
Gulam Zia, executive director, Knight Frank India, said, “The launches have gone up probably due to optimism or speculations that things are approving, but the correction could be seen in the second half of 2019.” The average per square feet rate came down to ₹7,014 in 2019 compared to ₹7,192 in 2018.
The report says the ongoing economic slowdown impacted national and state elections in 2019, real estate and also consumer sentiments. Zia added, “Residential sector in Mumbai was also hit by the slowdown. Credit crunch impacted end-user sentiments and sales declined by 14% in the last six months of 2019 as compared to 2018 in the same period.”
The report adds that developers continue to dole out freebies for buyers and affordable houses continued to dominate launches in MMR. The decline rate was lower in the affordable and mid-segment markets of peripheral suburbs and Thane. MMR has the highest quantum of unsold inventory in India at 145,301 units, registering a 15% growth since 2018.
Vikram Mehta, a developer from western suburbs, said, “Developers need to be flexible while quoting prices to potential buyers. I had a project in Kandivli and I was able to have decent amount of sales for 2-BHK apartments in the past six months. Developers need to respond as per the market if we want to balance the launches and sales.” The report says that office leasing in MMR touched a historic high of 9.7 million square feet in 2019, registering a 22% year-on-year growth compared to 2018, mainly driven by big pre-commitment deals. Central Mumbai and central suburban business districts (SBD) witnessed the highest rental growth of 7% a year when comparing last six months of 2018 and 2019. Bandra-Kurla Complex witnessed a 4% growth and SBD (west) saw a 3% growth in office rentals.