Sales outstrip new launches in Mumbai. A look at what that means for you
Builders are holding off on new projects ahead of RERA and GST imposition, so it’s a good time to bargain if you’re in the market for a home, analysts sayreal estate Updated: Jun 16, 2017 19:42 IST
If you’re looking to buy a home, now may be a good time, according to a report released by realty consultancy JLL India. The report, released on May 15, indicates that for the first time since 2008, the number of residential units sold was higher than the number of new units launched.
“This means a reduction in the city’s unsold inventory,” says Ramesh Nair, CEO and country head at JLL India. “Developers may have finally realised that it was resulting in a demand-supply mismatch. So this is a good time to negotiate well and secure a good deal.”
Residential data for Mumbai show that in 2014, there were 34,500 launches and only 26,500 units sold. In 2015, there were 36,300 launches and 32,400 units sold. “For the first time in nine years, the trend reversed in 2016 and this has continued in the beginning of 2017,” says Nair. More than 31,000 units were sold while only 29,400 units were launched last year.
Part of the reason, analysts say, is that developers are busy preparing and aligning their models to meet norms prescribed under the Real Estate (Regulation and Development) Act, or RERA, and the newly approved Goods and Services Tax expected to come into force on July 1.
“Project launches have been sluggish since last year because developers turned to focussing on execution and delivery of ongoing projects because they noticed demand rising,” says Dharmesh Jain, chief managing director of construction company Nirmal Lifestyle. Demonetisation also resulted in deferring of project launches and curbing of marketing spends.
Part of the difference in numbers can be attributed to reasons such as availability of affordable housing projects and the incentives announced for developers in the Union Budget to construct affordable housing, says Anurag Jhanwar, business head-consulting and data insights, at realty consultancy PropTiger.
According to a Proptiger study, sales of affordable units (those under Rs 1 crore) in the Mumbai Metropolitan Region in the last quarter accounted for 55% of all sales, with 1BHK and 2BHK the highest-selling variants. They made up for 88% of units sold. Nearly 30% of the sales were in Vangani, Thane City and Dombivli.
Ready-to-move-in 1BHK and 2BHK property in areas such as Chembur, Ghatkopar, Goregaon and Powai pockets with high connectivity, enhanced infrastructure and social amenities have also witnessed higher demand in the last few quarters, says Jain of Nirmal Lifestyle. “Developers are targeting these areas with 1BHK homes aimed at millennials looking for affordable EMIs and smaller homes that are easier to sell,” he adds.
The situation will continue for at least the next six months, says Rajan Bandelkar, vice-president (west) of realty self-regulatory body NAREDCO. “With GST and RERA in full force, sales are definitely going to be more than launches since developers and buyers are becoming more cautious, so this could be a good time to invest in a home if you’re an end-user,” he says.
It is advisable to developers to temporarily defer new launches to neutralise the demand-supply mismatch, experts say. “Appropriate project management that takes into account existing supply and new launches is the key to sustainable development,” Jain adds.