Mumbai, the financial capital of India, has been one of the worst affected cities due to the pandemic. The city has recorded nearly three million COVID-19 cases over the last two years. The ensuing lockdown and stalling of economic activities impacted all sectors, including real estate. The city went through its worst troughs during 2020 when the residential demand dropped to half compared to the preceding year. However, Mumbai and its peripheral areas witnessed positive residential real estate activity momentum during the last year, which continued in Q1 2022.
According to the Real Insight Residential – January-March 2022, a quarterly analysis of India’s eight leading housing markets by the REA India group company, demand in Mumbai increased by 26 per cent in Q1 2021, despite the advent of the third wave during the starting of the year. The city took a maximum share of 33 per cent in demand amongst the top eight cities in Q1 2022. The mass vaccination drive and fewer restrictions, which aided in business continuity, have been pivotal in improving consumer sentiments.
The optimism of homebuyers in Mumbai is visible because it recorded the highest sales since bottoming out during the first wave in 2020. The demand in the first quarter of 2022 is already 83 per cent closer to the pre-pandemic levels of Q1 2019. The trends suggest that the growth momentum of residential sales is poised to increase in the coming quarters as they search for property has intensified in the city as the impact of the pandemic is slowly subduing. Corroborating with this, Mumbai has been trending in the first position since October 2021 on Housing.com’s IRIS index, a leading indicator of upcoming demand in 42 key Indian cities. The volume of search and queries to buy a property in Mumbai and its peripheral micro-markets peaked in January 2022. Also, the registrations for both primary and secondary sales have surpassed the pre-pandemic levels and have doubled in March 2022 compared to the same period in 2019.
In the upcoming two quarters, homebuyers in Mumbai will look for a property with social infrastructures, such as healthcare and education facilities within a 2 km radius, as per the Residential Realty Consumer Sentiment Outlook (January to June 2022). Most of the upcoming demand will continue to be concentrated in peripheral locales, such as Thane, Navi Mumbai, Kalyan-Dombivli and Vasai-Virar. Having said that, Mumbai is one of the most expensive residential markets in the country. Also, amidst the rising input and construction costs from the current geopolitical tensions, many notable developers have indicated that they will hike the property prices in the coming months. Hence, there is still a need for initiatives such as stamp duty reductions and tax rebates to incentivise fence-sitting home buyers and aid them in closing in on a purchase.
- Mumbai and its metropolitan region (MMR) recorded a strong growth of 246 per cent in the new supply in Q1 2022, with 30,360 units launched.
- Residential sales in the city grew by 26 per cent, with 23,361 units sold.
- Mumbai continues to take the first spot in the national sales tally.
- Properties priced below INR 45 lakh saw maximum (46 per cent) traction, followed by more than INR 1-3 crore price bracket, which accounted for 26 per cent in the yearly tally. 1BHK is the preferred configuration amongst Mumbai homebuyers.
- Peripheral micro-markets such as Thane West, Dombivli, Kalyan West, Panvel and Vasai recorded the region's highest sales.
- The unsold inventory, which stood at 2,55,814 units by the end of Q1 2022, registered a marginal increase of 1 per cent.
- As the sales velocity is gathering momentum, the inventory overhang has declined to 48 months at the end of Q1 2022, compared to 62 months in the same period the previous year.
Renuka Kulkarni, a seasoned real estate professional, brings over five years of diverse experience in research, consulting, and architectural design within the urban sector. Her expertise spans public and private projects, showcasing proficiency in real estate research, trend interpretation, and policy analysis. With qualifications in architecture and a master’s degree in Data Science (Business Intelligence & Data Analytics) from IIIT Bengaluru, along with an M. Tech in Urban Development and Management from TERI School of Advanced Studies, New Delhi, Renuka seamlessly blends data analytics with market insights, offering a holistic understanding of the industry in her research pieces.
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