Woes Affecting Real Estate in Mumbai

1. Woes Affecting Real Estate in Mumbai

2. The real estate in Mumbai may be among the most sought after in India however the property market in the MMR has shown scant capital appreciation over the past three quarters. Property in Mumbai is already counted the top 100 most expensive cities in the world. While such high rates may signal the ascent of Mumbai as a top international financial destination, currently it bodes poorly for builders in Mumbai many of whom have a large stock of unsold inventory in their hands. While there are a large number of luxury apartments in Mumbai which can be bought and sold with relatively less difficulty by affluent buyers, the city has failed to match the demand for low income and mid income housing with correctly priced homes. This has led to property rates in Mumbai to continue to fall and stagnate since the early part of 2015 till today.

3. As the financial capital of the country, Mumbai and the regions surrounding it have a vast number of properties which are priced above one crore rupees. As a matter of fact, it is estimated that nearly 70 percent of the existing supply of new residential projects in Mumbai is priced above one crore. This has led to a mismatch between demand and supply as the majority of demand for property in Mumbai is at a significantly lower price point. Many developers in Mumbai blame the higher asking price of new projects in Mumbai upon higher prices for land as well as an increase in the cost of construction. Many builders in Mumbai today are left holding a large inventory as sales of new flats in Mumbai have dwindled.

4. It is estimated that Mumbai currently has over two lakh units of unsold inventory and builders in Mumbai are mired in the task of offloading this inventory which shall allow them to begin work on new projects. By offering very aggressive discounts builders in Mumbai have resorted to relieve themselves of excess inventory and with the gains on the inventory sold hope to begin work on new projects in Mumbai. Additionally it is suspected that many top builders in Mumbai are currently far than liquid than is ideal and that delays in attaining approvals for new apartments in Mumbai have led to difficulty in projects to get off the ground as buyers fear that a home they buy today may take a long time to be built and handed over. This cycle of less liquidity and subsequently lower sales has led to builders in Mumbai becoming even less liquid and has further increased the difficulty in completing existing projects.

5. Many of those who have visited Mumbai have been appalled by the state of the city’s infrastructure which becomes menacing at the monsoon season. The poor quality of the city’s roads as well as the inadequate penetration by the currently running metro line adds to the woes of Mumbai property. Furthermore the delays in the completion of new metro lines have further dismayed the residents of the city who had hoped for some reprieve in their daily commute within the city. The above mentioned facts are taking the sheen from property in Mumbai and adversely affecting builders as well as end users of property in the city.