Demand for 2,3 BHK in Mumbai rises by 18% in Q2

05 Aug 2021 CW Team

As a result, demand for smaller houses, such as 1-bedroom flats, is expected to decline to 24% of overall demand in Q2 2021, down from 34% in Q1 2021 and 37% in Q2 2020. The nearby residential markets of Navi Mumbai and Thane have also recovered, with the latter reclaiming its status as the most sought-after real estate hotspot in the Mumbai Metropolitan Region (MMR).

Several reasons have contributed to the rise in demand for larger houses in Mumbai, including developers' simple and inexpensive payment plans, the expansion of the 2% stamp duty benefit, the availability of cheaper home loans, and banks' lower margin money (down payment) requirements. Furthermore, these variables have contributed to the residential demand drop being limited to just 16 percent QoQ, compared to a nationwide demand decline of almost 23 percent QoQ. During the lockdown period, the government's instructions to continue select building operations while adhering to all safety standards were also beneficial in halting the supply decrease to only 6.6 percent.

“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, price adjustments ranging from 0.7 percent to 1.4 percent occurred in all three residential markets of Mumbai, Navi Mumbai, and Thane during the quarter, which also experienced growing medical expenditures and debt. The rebound may be ascribed to reasons such as continuous demand for large-scale properties and a greater flow of global private equity funds assured by the sector's strong risk-adjusted returns.

The western suburbs, priced between Rs 15,000 and 20,000 per sq ft in Andheri, Malad, Goregaon, Kandivali, and Dahisar, remained a buyer's favourite in the quarter, owing to major IT and commercial development as well as upcoming metro connectivity in these areas, according to the Magicbricks research. Despite tightening demand and supply, residential property prices in Thane increased by 1.4 percent in the third quarter. This price increase is the fastest of any location in the Mumbai Metropolitan Region (MMR), and it follows the national trend. However, there has been a notable change in house purchasers' preferences toward under-construction homes, which can be attributed to affordability.

Due to its low prices and great connections, Navi Mumbai has also seen an increase in demand. Despite the lockdown and limitations on construction-related activities, home prices in Navi Mumbai increased by 0.7 percent in the quarter ending June 2021.

Furthermore, with the resumption of economic and building activity in mid-June, market traction is projected to return to normal levels, increasing residential supply and demand in the city.

According to the Magicbricks PropIndex report, Mumbai, the country's largest real estate market, is seeing an increase in demand for 2 and 3-bedroom apartments, which accounted for up to 70% of total demand in the quarter ended June, translating to a 10% sequential increase and an 18% year-on-year increase in demand for mid-size and larger homes. As a result, demand for smaller houses, such as 1-bedroom flats, is expected to decline to 24% of overall demand in Q2 2021, down from 34% in Q1 2021 and 37% in Q2 2020. The nearby residential markets of Navi Mumbai and Thane have also recovered, with the latter reclaiming its status as the most sought-after real estate hotspot in the Mumbai Metropolitan Region (MMR). Several reasons have contributed to the rise in demand for larger houses in Mumbai, including developers' simple and inexpensive payment plans, the expansion of the 2% stamp duty benefit, the availability of cheaper home loans, and banks' lower margin money (down payment) requirements. Furthermore, these variables have contributed to the residential demand drop being limited to just 16 percent QoQ, compared to a nationwide demand decline of almost 23 percent QoQ. During the lockdown period, the government's instructions to continue select building operations while adhering to all safety standards were also beneficial in halting the supply decrease to only 6.6 percent. “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, price adjustments ranging from 0.7 percent to 1.4 percent occurred in all three residential markets of Mumbai, Navi Mumbai, and Thane during the quarter, which also experienced growing medical expenditures and debt. The rebound may be ascribed to reasons such as continuous demand for large-scale properties and a greater flow of global private equity funds assured by the sector's strong risk-adjusted returns. The western suburbs, priced between Rs 15,000 and 20,000 per sq ft in Andheri, Malad, Goregaon, Kandivali, and Dahisar, remained a buyer's favourite in the quarter, owing to major IT and commercial development as well as upcoming metro connectivity in these areas, according to the Magicbricks research. Despite tightening demand and supply, residential property prices in Thane increased by 1.4 percent in the third quarter. This price increase is the fastest of any location in the Mumbai Metropolitan Region (MMR), and it follows the national trend. However, there has been a notable change in house purchasers' preferences toward under-construction homes, which can be attributed to affordability. Due to its low prices and great connections, Navi Mumbai has also seen an increase in demand. Despite the lockdown and limitations on construction-related activities, home prices in Navi Mumbai increased by 0.7 percent in the quarter ending June 2021. Furthermore, with the resumption of economic and building activity in mid-June, market traction is projected to return to normal levels, increasing residential supply and demand in the city.