At a time when India’s real estate sector is battling a slowdown, a recent JLL survey indicates that 69% of the overall unsold inventory in Mumbai is priced above Rs 1 crore each, indicating the unaffordable nature of housing in the commercial capital.
The report, while factoring in the ‘unafforadbility factor’ in Mumbai, calculated that it may take a person 13 years to afford an apartment worth Rs 1 crore.
There are 30,501 units which fall above Rs 1 crore price out of 44,032 in the city.
“69 per cent of the overall unsold inventory (within BMC limits) is of units worth more than Rs one crore each. That is, 30,501 units out of a total number of 44,032 fall in this ticket size,” a JLL study said.
The report said that the trend will continue as the upcoming launches expected within the city limits will largely consist of units priced above Rs one crore and above.
In order to make housing affordable in Mumbai the government should facilitate opening up new land parcels in and around cities by providing good connectivity there. “Approval costs and time taken for developers to get them – responsible for high holding cost – need to be reduced so that developers can pass on those benefits to the buyers,” Ramesh Nair, COO & International Director, JLL India said.
The JLL study that covered projects within Mumbai’s municipal limits said that 83 per cent of the housing units launched in the second quarter of 2015 were worth over Rs 1 crore.
Although the share reduced from 90 per cent at the end of first quarter of 2015 due to some new launches in suburban locations, it is still overwhelmingly high for a city where only a limited percentage of residents are able to afford ticket sizes of over Rs one crore.
The second quarter of 2015 witnessed only 3.21 per cent of housing in the Rs 31-65 lakh bracket, whereas there were no housing units under Rs 30 lakh in Mumbai within BMC limits. In comparison to pan-India figures, the numbers are highly skewed towards the higher ticket sizes in Mumbai.
The housing units that were available in the affordable range were located in suburban locations. Even if the overall inventory is considered, there is very little stock in the affordable range (Rs 65 lakh and below) in the city.
To suit the budget of a majority of home buyers in Mumbai, developers have been steadily reducing average unit sizes over the last few years and will continue to launch smaller-sized apartments for the same reason. The reduction in average unit sizes has been the highest in Mumbai at 26.4 per cent from 2010 to March 2015. The average unit sizes in Mumbai have been the lowest among Indian cities.