Demand for 2, 3 BHKs in Mumbai sees 18% on-year rise in June quarter – The Economic Times

Clipped from: https://economictimes.indiatimes.com/industry/services/property-/-cstruction/demand-for-2-3-bhks-in-mumbai-sees-18-on-year-rise-in-june-quarter/articleshow/84431778.cmsSynopsis

Various factors have been driving this increased demand for larger homes in Mumbai, including easy and affordable payment plans offered by the developers, extension of the 2% stamp duty benefit, availability of cheaper home loans, and lower margin money (down payment) requirement by banks.

Mumbai, the country’s biggest real estate market is witnessing a rise in the demand for 2 and 3-bedroom apartments, forming up to 70% of the total demand in the quarter ended June, and translating to a 10% sequential increase and 18% on-year increase in demand for mid-size and larger homes, showed Magicbricks PropIndex report.

Accordingly, the demand for smaller homes including 1-bedroom apartments was seen declining to 24% of the total demand in Q2 2021-down from 34% in Q1 2021, and 37% in Q2 2020. The neighbouring residential markets of Navi Mumbai and Thane also bounced back with the latter reinstating its position as the most sought-after realty hotspot within the Mumbai Metropolitan Region (MMR).

Various factors have been driving this increased demand for larger homes in Mumbai, including easy and affordable payment plans offered by the developers, extension of the 2% stamp duty benefit, availability of cheaper home loans, and lower margin money (down payment) requirement by banks.

Further, these factors have also been instrumental in limiting the decline in residential demand to just 16% QoQ, as compared to national demand decline of over 23% QoQ. The Government directives to resume some construction activities, with all safety protocols during the lockdown period, also proved to be helpful in arresting the supply decline to just 6.6%.

“Unlike the first wave, the recovery in demand for residential real estate has been faster in the second wave. Strong impetus from the Government and the developers proved to be the right push in time, limiting the contraction in residential demand by the end of the quarter in the residential market of Mumbai. The much-needed support has also been influential in driving consumer demand for bigger homes in Mumbai, which has been historically characterized by a higher preference towards small-sized 1 BHK units, has been observing a high demand for mid-sized and bigger homes in the recent months,” said Sudhir Pai, CEO, Magicbricks, said.

According to him, all the three residential markets of Mumbai, Navi Mumbai and Thane witnessed price corrections ranging from 0.7%-1.4% during the quarter that also saw rising medical expenses and debt. The recovery can be attributed to factors such as a consistent demand in the large-size properties and a higher flow of global private equity funds ensured by good risk-adjusted returns by the sector. This swift recovery signals a revival in stability in the industry.

The Magicbricks research also revealed that the western suburbs priced between Rs 15,000 -20,000 per sq ft in Andheri, Malad, Goregaon, Kandivali, and Dahisar, continued to be buyers’ favourite in during the quarter, ascribed to major IT and commercial development along with upcoming metro connectivity in these areas.

Thane witnessed 1.4% growth in prices of residential properties despite a tightening demand as well as supply during the quarter. This growth in prices is the fastest amongst all other areas in the Mumbai Metropolitan Region (MMR), and in line with the nationwide trend. However, there is a noticeable shift in home buyers’ preference towards under-construction units, ascribed mainly to affordability and the payment flexibility offered.

Navi Mumbai also saw a rise in demand due to affordable rates and excellent connectivity. Despite the lockdown and restrictions on construction related activities, Navi Mumbai registered a marginal 0.7% growth in property prices during the quarter ended in June 2021.

Further, as economic and construction activities started to resume from mid-June, the traction in the market is expected to rebound to normal level thereby increasing residential supply and demand in the city.

(Magicbricks is a part of Bennett, Coleman & Co, which publishes The Economic Times.)
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