Lately, the City of Dreams has been witnessing a slump in its real estate market. The challenges to the Mumbai real estate industry growth have translated into steep property prices.
To understand the scenario better, let’s unpack the five main hurdles faced by the city’s real estate sector.
Mumbai’s unique geographical attributes also lead to slow real estate growth. Hemmed by water on three sides, the city has never experienced circular (inward-out) development like most other cities. More or less, Mumbai real estateecosystem observed linear development northwards or southwards.
Moreover, the distance of the prime South city with the suburbs, coupled with the snail-paced growth of the transit infrastructure, resulted in increased property prices of these prime city centres. This further discouraged real estate development in the region.
Another major hurdle in real estate growth is that many of Mumbai’s already dwindling land resources are locked in dilapidated buildings and slums.
With that said, efforts have been made by the Government to rehabilitate the slum dwellers. Once the rehabilitation projects are up and running, real estate developers will have access to acres of previously locked land, empowering the industry to thrive.
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Slow infrastructure development
Meanwhile, the shortage of labour and social distancing norms due to the COVID-19 pandemic has agonizingly slowed down the city’s infrastructure development. Major projects like the Mumbai metro, coastal road network and the Navi Mumbai international airport have made little to no progress lately.
Ultimately, the city authorities have been unable to open up new land pockets for real estate development. As a result, homeowners prefer living in established localities with access to these new transport infrastructures and avoid investing in untapped areas.
Skyrocketing property prices
Mumbai is known for housing India’s most expensive real estate market. The exorbitant property prices have pushed many people into buying homes in the suburbs and the neighbouring cities of Navi Mumbai and Thane. That’s also one of the many reasons Maharashtra enjoys the lion’s share of home loan applications in India.
But the introduction of the PMAY ‘Housing for all’ initiative pumped several affordable projects into the market. However, most of these are located on the peripheries of Mumbai and neighbouring cities, where the transportation system isn’t well developed. As a result, there’s been a mismatch in supply and demand.
Rising ready reckoner rates
Ready reckoner rate, also known as circle rate, is the minimum price at which a builder must register when it’s transferred. Usually, the state governments determine the rates and revise them depending on the market dynamics.
In 2013-2015, the state government increased the ready reckoner rates by about 15-20%, thereby increasing property prices. This has further dampened buyer sentiment.
Additional Read: All about the Stamp Duty and Registration Charges in Mumbai
Even after all the setbacks, Mumbai real estate industry forecast predicts positive movement in sales.
So, if you’re looking for a home in Mumbai, Tata Capital’s got your back with bespoke housing loans. Enjoy unmatched disbursal speeds, attractive interest rates, and an easy application process with us.
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