House that, MMR! 65, 650 homes sold in 9 months

House that, MMR! 65, 650 homes sold in 9 months

Renewed Demand Beats Headwinds, Show 8% Growth

Buyers begin to prefer larger homes costing > Rs 2 cr, shows Knight Frank -NAREDCO study. 

MUMBAI, Oct 1 (The CONNECT) - Despite headwinds, Mumbai Metropolitan Region’s residential demand continues to grow in 2022 and in just 9 months of the year 2022, the city has achieved sales volume of 65,650 home units.

This is 8% higher than the annual pre-pandemic levels of 60,943 units recorded in 2019, , a Knight Frank - NAREDCO Report on ‘The Grand Revival of Mumbai’s Residential Market’ says.

This velocity has been achieved in a year marked by 140 bps repo rate hike (until 29th September 2022), levy of additional 1% metro cess and with no stamp duty cut benefits

Residential Sales Growth 2019-2022

Year

Sales (No. of Units)

Growth with reference to pre-pandemic level

2019 (pre-pandemic level)

60,943

 

2020

48,688

-20%

2021

62,989

3%

2022 YTD (January-September, 2022)

65,650

8%

Source: Knight Frank Research

The share of housing sales for properties with ticket sizes in the range of Rs 1 crore to Rs 2 crore rose from 16% in 2021 to 18% in 2022 YTD, while premium housing gained traction with the share of above Rs 2 crore ticket size growing from 6% in 2021 to 10% in 2022 YTD. This reflects the home buyer’s inclination towards purchasing large sized homes. The demand for homes with ticket sizes ranging from Rs 50 lakh to 1 crore, however, has shrunk from 30% market share in 2021 to 22% in 2022 YTD. The demand for residential properties with ticket size of Rs 25 lakhs to 50 lakhs remained unchanged over the year with a share of 29%. Under Rs 25 lk ticket size properties saw a minor upward movement amounting to 20% of the total annual sales.

Size Split for Sales in 2021 and 2022*

Price Ticket Categories

2021

2022 YTD*

 

Sales Volume

% share

Sales Volume

% share

<2.5 mn

11,986

19%

13,000

20%

2.5–5 mn

18,013

29%

19,249

29%

5-7.5 mn

9,613

15%

8,692

13%

7.5-10 mn

9,433

15%

6,041

9%

10-20 mn

10,040

16%

12,007

18%

>20 mn

3,905

6%

6,661

10%

Source: Knight Frank Research

*Note: 2022 (YTD) data updated until Q3 2022.

From the perspective of Q3 2022, the report highlighted that demand for homes with INR 1 crore and above ticket size recorded an uptick. INR 1 cr-2 cr category recorded a share take-up of 19% as compared to 18% in Q2 2022, while the above 2 cr ticket size category recorded a share take up of 11% as compared to 10% in Q2 2022. The demand for 50 lk-1 cr category remained unchanged. MMR recorded a dip in demand for homes in under INR 50 lk category to a share contribution of 47%.

Size Split for Sales in Q2 2022 and Q3 2022

Price Ticket Categories

Q2 2022

Q3 2022

 

Sales Volume

% share

Sales Volume

% share

<2.5 mn

4,601

20%

        4,088

19%

2.5–5 mn

6,894

30%

          6,109

28%

5-7.5 mn

2,836

13%

        2,827

13%

7.5-10 mn

2,136

9%

        1,988

9%

10-20 mn

3,972

18%

        4,155

19%

>20 mn

2,212

10%

2,282

11%

Source: Knight Frank Research

 Shishir Baijal, Chairman & Managing Director, Knight Frank India said, “The MMR residential market is a story of sustained growth over the last eight quarters. This sales momentum has been the result of a combination of factors such as – attractive pricing, lowest home loan interest rates and State Government stimulus, all ensuring that home affordability is in an attractive zone for buyers. However, the biggest change has been the buyer’s perception which is positively tilted towards home ownership. We expect the core strength of the market to remain intact in the future, despite the headwinds created by the geo-political situation and their economic impacts, albeit the factors of affordability are not breached abruptly and are in tandem with growth in income.”

Changing global scenario leading to a rise in raw material prices coupled with the robust sales momentum encouraged developers to opt for price rise in 2022. The weighted average price in MMR is reported to be INR 7170 sq ft.

Sharing the context to the price movement since 2010, the report cited that weighted average prices in MMR recorded an upward movement since 2010 and peaked in 2016, recording an average housing price of INR 8120 per sq ft. The rise is in tandem with the fall in housing sales between 2010 and 2016. The highest YoY growth in the weighted average housing prices was recorded at 10% in 2014. Post 2017, the housing prices started to ease in the MMR region. The timeline coincided with the implementation of RERA and GST. Turnaround was witnessed in 2020 where the housing sales picked up on account of stamp duty waiver and all-time low mortgage rates and the price value has been moving into higher trajectory since then.

Central suburbs are the only market that recorded a substantial YoY growth in 2022 YTD of 33%.

Housing demand in Q3 2022 was mainly concentrated in the peripheral suburban micro markets. Peripheral central suburbs account for 22% of the housing demand in Q3 2022, followed by peripheral western suburbs accounting for 18%.

Sandeep Runwal- President NAREDCO Maharashtra and MD Runwal Developers, said, “The Mumbai Metropolitan Region, which is constantly changing, has seen the most rapid growth in the real estate sector and has seen a lot of change in the recent years,

THE BIG INFRASTRUCTURE PUSH - MMR

International property consultant Knight Frank India along with NAREDCO today Highlighted “The Big Infrastructure Push”. It assesses the real estate impact of the massive INR 2.1 trillion of transport infrastructure projects currently underway in the Mumbai Metropolitan Region (MMR) excluding Navi Mumbai International Airport. The report analyses their impact in terms of the locations/ corridors that are likely to see the most traction in terms of real estate development due to the improved connectivity.

The report has identified 20 locations as the next real estate growth corridors in MMR as a direct outcome of the infrastructure development. Primarily the result of approximately 250 km of Metro lines and 70 km of road projects cumulatively worth over Rs 2.1 trillion (INR 2.1 lakh crore) at various stages of construction in the region. The extent of real estate traction in the resulting locations has been evaluated based on the availability of land for greenfield development or the redevelopment potential that the catchment offers.

KEY INFRASTRUCTURE PROJECT IMPACT ON REAL ESTATE

METRO LINE NAME

PROJECT IMPACT ON REAL ESTATE SUPPLY

Mumbai Metro Line 2 A

Dahisar to DN Nagar

Estimated 11 mn sq ft of office space to be added

Mumbai Metro Line 3

Colaba – Bandra – SEEPZ

Estimated 2.8 mn sq ft of office space to be added in BKC

Mumbai Metro Line 4

Kasarvadavali (Thane) to Wadala

And

Mumbai Metro Line 4 A

Kasarvadavali to Gaimukh

Estimated 50 mn sq ft of real estate supply to be added

 

Mumbai Metro Line 6

Lokhandwala to Vikhroli (EEH)

Office space development of 32 mn sq ft, adding approximately 20% to the existing stock of Mumbai

Mumbai Metro Line 7

Dahisar East to Andheri East

Estimated 30 mn sq ft of office space or a massive 20% to the existing inventory

Chattrapati Shivaji Maharaj Terminals (CSTM) Redevelopment

Up to 1.8 mn sq ft of commercial development or 1 mn sq ft of residential development could be taken up at Byculla as a result of the redevelopment exercise

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