Embracing Mumbai’s Shifting Real Estate Market: Strategies for Buyers & Investors

Posted On - 15 April, 2024 • By - Yash Jaisingh

Mumbai’s real estate market is experiencing a period of adjustment after the initial boom of early 2023. Monthly sales have stabilized around 10,000 registrations, with redevelopment units comprising a quarter of that figure. The festive season of late 2023 failed to meet expectations, reflecting a shift in market dynamics.

Understanding the Slowdown:

  • Pent-up Demand Absorption: The surge of project launches between 2020 and 2022 significantly reduced pre-existing demand.
  • Buyer Confidence Weakening: Intense competition and inflated prices have instilled caution in buyers, particularly for under-construction projects.

A Look Ahead: National Trends Impact Mumbai

A recent report by the Confederation of Real Estate Developers’ Association of India (CREDAI) paints a broader picture of national growth. They forecast a significant upswing in the Indian real estate sector, with a projected market size of $1.3 trillion by 2034 and a staggering $5.17 trillion by 2047.

Key Takeaways from the CREDAI Report:

  • The Indian real estate market is currently valued at $300 billion, with an 80/20 split between residential and commercial segments.
  • CREDAI expects the real estate sector to be a major contributor to India’s GDP, reaching 13.8% by 2034 and 17.5% by 2047.
  • The report highlights a trend towards larger and more expensive homes, with over 61% of the current residential supply exceeding Rs 45 lakh. The average home size is also increasing by 11% annually.
  • Anticipating rising demand, CREDAI projects a need for 7 crore additional housing units by 2030. Notably, over 87.4% of this demand is expected to be for houses priced above Rs 45 lakh.

Adapting to the New Mumbai Market:

While the national outlook is optimistic, navigating the current Mumbai market requires strategic planning:

  • Strength of Established Developers: Reputable players with a history of timely delivery and quality construction are likely to perform well, especially in under-served areas. Buyers are more willing to trust established brands, even at potentially higher price points.
  • Luxury Market Correction: The luxury segment is poised for a price adjustment due to oversupply and inflated prices. Developers in this segment will need to re-evaluate their pricing strategies to meet the expectations of discerning buyers.
  • Rise of Payment Plans: In a cautious market, flexible payment options are becoming increasingly important for buyers seeking to manage risk. Builders offering attractive payment schemes will be better positioned to attract and retain customers.
  • Project Acquisition Moderation: The recent surge in project acquisitions is likely to slow down as the market adjusts. Smaller and mid-sized developers may need to adapt their strategies to the evolving market conditions.
  • Shifting Preferences, Stable Overall Demand: While individual project sales might see a slowdown, the overall demand for homes in Mumbai is expected to remain steady. However, buyers may show interest in a wider range of projects, impacting sales distribution across different segments.