October 17, 2023: The area sold in the Mumbai Metropolitan Region (MMR) will grow by 8-9% year on year in FY2024, supported by continued end-user demand and healthy affordability, rating agency ICRA estimates.
The MMR is the largest residential real estate market among the top seven cities in India, accounting for 25% of the area sold in FY2023 and is expected to maintain its leadership position in FY2024. The healthy residential sales and calibrated launches resulted in a decadal low unsold inventory of 182 million square foot (msf) as of June 2023 and represented 28% of the total unsold inventory in the top seven cities, the agency said in a report.
Tushar Bharambe, assistant vice-president and sector head, ICRA, said: “During FY2023, the overall sales in the MMR market (151 msf) outstripped the fresh launches added during the year (141 msf), with a replacement ratio of 0.9 times. ICRA estimates the replacement ratio to remain around one time in FY2024. The sustenance of healthy sales velocity along with the calibrated launches led to a significant improvement in years-to-sell to 1.2 years as of June 2023 from 2.8 years in June 2020. ICRA expects the new launches in MMR to be around 145 msf in FY2024, while the years-to-sell is expected to remain around 1-1.2 years as of March 2024.”
Property prices in MMR
The average selling prices in MMR have increased at a compounded annual growth rate of 4.3% between FY2020 and FY2024, which is lower than average rise in prices of the top-seven cities at 6.6% during this period. The extended central suburbs accounted for the largest share (23%) of unsold inventory in MMR. However, this region has also seen the maximum activity in the MMR market in FY2023 and was the highest contributor to new launches (23%) and sales (25%).
The average selling prices in central suburbs were stable and the extent of increase in extended central suburbs and Thane was modest within the MMR, given the sizeable availability of marketable supply and competitive intensity in these regions. These three regions have accounted for 45-48% of the total available supply in the MMR market between FY2021 and Q1 FY2024. ICRA expects the average selling prices to increase by 3-5% in FY2024 in the MMR market.
Commenting on the trend in preferences of home buyers, Bharambe added: “The housing sales (in msf) in the MMR market seems to be predominantly leaning towards homes in the mid-income segment with the ticket size ranging between Rs. 1 to 3.5 crore. This segment has seen a steady gain in its share in the overall sales to 35% in Q1 FY2024 from 26% in Q4 FY2020. The luxury segment (ticket size of above Rs. 3.5 crore) has also witnessed an increase in its share to 10% from 7% during the same period. ICRA expects the trend in sales of mid-income and luxury segments to continue with aspiration for home ownership and upgrade among buyers.”
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