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.
