CHANGE in BUSINESS DYNAMIC of MUMBAI'S RESIDENTIAL.

Real estate has always been a superior investment avenue that is less volatile to market conditions. With pandemic at hand the business dynamic has shifted. The outbreak of the Covid virus inspired home buyers, fence sitters and millenials in buying a home for themselves. This was due to the consecutive reforms and measures announced by the government to remobilize the economy. Historic measures like reduction in stamp duty, premiums for real estate along with reducing the home loan rate to 6.96% from 8% to 9% encouraged these new age home buyers to invest in residential space. This resulted in a record-breaking spike in home sales which touched a decade high in Q4 of CY2020. 

The Shift in Home buying

With consecutive rate cuts, the residential space across the country witnessed a significant price correction.  While surviving in Mumbai had its own struggle but a spike in home buying in and around Mumbai, MMR region was seen.  With the imposed lock-down and emergence of Work-From-Home culture, a need state was created for larger spaces that could potentially accommodate a separate working space along with other activities that were performed daily. Restriction on public mobility and the rise of work from home enabled home buyer in buying larger spaces that provided a boast of amenities such as an integrated township with clubhouse, schools &hospital within the township. Another trend witnessed here was individuals living in a rented apartment shifted to 1 BHKs or higher knowing the measures announced by the government. The existing home owners who were living in 1 BHKs upgraded to 2 BHKs considering the overall value and price correction.  This has largely helped the real estate sector to bounce back at a higher pace and move aggressively towards the growth path to revive the economy.

Preferential Shift towards Townships

Home buyers today have realized that living in stand alone building closer to offices or city may give higher monetary value but it when it comes to blissful living experience; a township takes center stage. Township not only offers a safe and secured living but it also enhances the overall living experience with every essential commodity at zero kilometers. Considering the current Covid scenario and the uncertainty of lockdown with rising cases, it has encouraged home buyers to invest in properties that are in an integrated township. The market dynamics on the other hand has also shifted from investment avenue to end user market.  The pandemic has also enlightened the millenials who have now realigned their priorities and invested in a house that provide larger value redefining the essence of Roti-Kapada-Makaan.

Areas That Witnessed Growth

Considering the lack open spaces in the core city, suburban Mumbai and the MMR region witnessed a significant spike in home sales. Areas like Thane, Kalyan, Badlapur in the central district of Mumbai, Andheri, Malad, Kandivali, Vasai-Virar in the western district and Panvel, Vashi & Navi Mumbai saw a significant spike in home sales. It wouldn't be wrong to say that most of these homes were a part of integrated townships considering the current trend and buying pattern of the home buyers. Stamp duty cut has played a pivotal role to expediting the buying decision in these areas.

Renting vs Housing in Mumbai

Living in metros comes at a cost, be it Mumbai or any other city in India. Renting was preferred by individuals who wanted to live closer to their office space with different set of priorities. On an average the renting cost of a 1 BHK in core Mumbai (Colaba, Byculla, Dadar etc.) would be in the range of Rs. 30000 to Rs. 45000 depending on the area and the space. Considering such cost, individual often tend to share space with a flat mate which reduces the cost to half. As expressed earlier, living in core Mumbai is a bit on the expensive side as the amount looks similar to a conventional 1BHK EMI in the MMR.  From the overall value, owning a house in extended suburban Mumbai or MMR region would be beneficial for individuals rather than renting a space that one needs to keep on switching every 11 months.  Furthermore, the cost of owning a house in Mumbai and areas around it has reduced making it the best time to invest in real estate.

Real estate has always been an asset class that provides more physical value in the longer run compared to other asset classes. Considering the current market scenario, a home buyer should always evaluate properties in a holistic manner keeping in mind the space, vicinity, amenities, area, construction quality, price appreciation of the properties around in last five years. These aspects play a major role in influencing the price appreciation and purchase decision.

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