Mumbai residential real estate prices are expected to rise by 6 per cent in 2016 against a slow growth in 2015 when it went up by barely 3.3 per cent.
The subdued rise in average residential property prices in 2015 in Mumbai came as a pleasant surprise as it was predicted to grow at 6-7 per cent (y-o-y). The average residential property prices in Mumbai and suburbs saw an appreciation of 7 per cent in 2014.
According to report released by real estate consultant JLL India, “Unlike the pre-global financial crisis (GFC) times – when prices saw double-digit growth (y-o-y) across the city and suburbs – the market has seen a rather subdued growth in prices over the last couple of years. This is definitely good news for the scores of end-users who wish to own a house in the city that has India’s priciest real estate.”
The Mumbai residential prices, including Thane and Navi Mumbai, saw a price rise of 2.8 per cent in 2015 in comparison to 5 per cent in 2014, whereas the residential prices in mumbai, excluding Thane and Navi Mumbai witnessed a price rise of 3.3 per cent in 2015 versus 7 per cent in 2014.
“At the sub-market level, south-central Mumbai and the eastern suburbs saw the maximum appreciation at 4.3 per cent and 4 per cent respectively, followed by northern Mumbai and western suburbs at 3.9 per cent and 3.5 per cent respectively. Outside the city and suburbs, Thane saw a 3 per cent appreciation in capital values, while the figure for Navi Mumbai stood at 6 per cent, ” JLL report said.
A look at the respective sales rate (as of 4Q15) also reveals that Mumbai did better at 10.1 per cent than Navi Mumbai at 5.5 per cent.
Smaller units are in demand lately due to their relatively affordable ticket sizes, and many builders are now offering them even in premium locations. Given the rather sluggish demand for larger homes due to unaffordability, the headroom for price appreciation in this category has reduced.
A JLL study in 2Q15 had showed that 69 per cent of the apartments in the city and suburbs were priced above Rs 1 crore. The number came down to 65 per cent in fourth quarter of 2015 showing how developers are trying to bring in affordability.
“Maharashtra government’s focus on infrastructure and affordable housing are expected to raise realty sentiments to a great extent in Mumbai in FY 2016-17. To this end, huge budgets have been allocated to metro and monorail expansion, and important connectivity links such as the development of Mumbai Trans-Harbour link and other road networks. Confidence levels in the residential market are set to receive a fillip if the Reserve Bank of India announces further repo rate cuts in the next one year, provided the banking institutions pass these benefits on to home-loan seekers,” Narasimha Jayakumar, chief business officer, 99acres said.