Mumbai real estate is the most volatile real estate market. Apartments that used to cost 2 crores in 2008 are now selling in excess of 7 crores. More than 300% appreciation in 7 years. This kind of appreciation has been unheard off. On the other hand, even the slightest doubt of uncertainty brings entire system to a complete standstill.
“Mumbai real estate buyers are holding back”
From March 2014 onwards Mumbai real estate has seen a gradual slow down in property sales. Buyers are holding back. Under construction projects are being sold but only where the approvals are in place. The builder’s reputation is important. Despite that the situation is grim. Mumbai real estate developers are coming up with subvention schemes and lucrative financing options to lure the buyer.
“No government clarity”
To add to all this, there is uncertainty from government policies. The Development Plan 2034
was a complete disaster and had to be scrapped. (Maharashtra drops Mumbai Development Plan; new version in 4 months
) Now they are saying it will take another 4 months to draft a new development plan. Add delays to it, make it a year. The new development plan has to be approved by the legislature. It will take another 3 months. Mumbai real estate developers are not going to invest a single penny till they do not have clarity. It is already visible. Dilapidated buildings that have signed redevelopment agreements are still standing. Builder’s are not moving forward due to the uncertainty. (Fiasco over Development Plan puts realty projects on standstill
“2011 once again”
This is the same scenario Mumbai faced in 2011. Government changed the measurements from super built-up to carpet area. The flowers beds, terrace areas, etc all were regularized. Mumbai real estate market took another 1.5 years for things to start moving once that clarity came in the picture. We will be facing the same time line this time.
“So what’s the bottom line with Mumbai real estate”
2015 will be a buyers market and will continue till the first half of 2016. Projects nearing completion (3 to 6 months) or completed (with all approvals) will sell quickly. Projects that are currently under construction that have all the approvals will sell but at a slow pace. Resale properties that are in the market will get absorbed as long as they are priced correct. Mumbai real estate will get absorbed at discounted prices. It is a buyer’s market right now and will continue to be so till 2016.