Mumbai: Mumbai remains the most unaffordable residential market in India, with 29 per cent of the city’s total under-construction units surpassing the Rs10 million (Dh616,371) mark as compared to 11 per cent and 5 per cent for the National Capital Region (NCR) and Bengaluru markets respectively, according to a report.
Only 48 per cent of the city’s under-construction units are below the Rs5 million mark, which is the lowest among the top six cities, including Pune, NCR, Chennai, Bengaluru and Hyderabad, according to a study by real estate consultancy firm Knight Frank.
“Incessant price rise and higher concentration of premium projects with a ticket size of more than Rs10 million in new launches have limited the purchasing ability of home buyers, resulting in a decelerating rate of absorption over the previous four quarters,” the report said. Furthermore, the large number of new launches in the previous four quarters has significantly increased the unsold inventory in the market.
Peripheral locations such as Vasai, Virar, Mira Road, Ghodbunder Road and Panvel witnessed a slew of new launches during the last one year. However, despite the waning interest of home buyers, quoted prices in Mumbai continue to remain high as developers are increasingly offloading their unsold inventory at a discount to investors who are willing to make substantial upfront payments, the report said.
Bengaluru remains the most affordable residential market, with more than 77 per cent of its total under-construction units falling below Rs5 million and this is followed by Chennai at 75 per cent. The deliberate strategy on the part of developers in these cities to focus on peripheral areas with the right size of apartment area has ensured that the new supply does not breach the affordability level of the target segment.
In contrast to this, Hyderabad has only 51 per cent of its total Rs5 million ticket size despite the city having the lowest weighted average price among the top six cities.
Mumbai and Chennai have the highest weighted average price of Rs5,900 per square foot and Rs4,500 sq ft respectively. The unique topography of these cities has ensured restricted supply of land, resulting in high prices for residential properties here. While the weighted average price in Mumbai city is much higher at Rs14,400 sq ft, it goes down to Rs5,900 sq ft for the entire Mumbai Metropolitan Region which also includes areas such as Thane, Navi Mumbai, Mira-Bhayander and Vasai-Virar.
The report also adds that an analysis of these top cities indicate that Bengaluru, Chennai and Pune residential markets are in relatively better health as compared to Hyderabad, Mumbai and NCR.
“Going forward, we expect the momentum in new launches to reduce significantly across these cities. This will help ease the inventory overhang in these cities, thereby improving market health in coming quarters.”