Mumbai skyline
At the top end of its property market, Mumbai is seeing some major erosion in asking prices and the final deal price. COVID-19 has removed some of the inflated bubble that category had been in for some time. Image Credit: Gulf News Archive

One of the world’s most desirable real estate markets, Mumbai, is still open for business. But is anyone really interested in buying anything aside from essentials, masks and, may be, some peace of mind?

Yes, they are buying real estate... and not just Chanel face masks. People who are in the market are closing deals swiftly. And why wouldn’t they, given apartments in the Worli area of South Mumbai are at 62 million rupees versus the initial asking price of 95 million rupees. And a 100 million rupees apartment is available for a negotiable 85 million rupees.

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New developments are being purchased at 95 million rupees from the original 150 million rupee in midtown Mumbai? Incredulous, but true. During COVID-19 times, buyers are insisting on balconies and private terraces instead of gyms and swimming pools. And if a luxe apartment has either, it’s a deal straight to the bank.

Photographs, virtual tours and a final show-around – when everything is almost set in stone between the realtor and the buyer - is the new order of the realty business in Mumbai. (But not without seriously vetting the buyer prior to the deal...)

Stamp duty does its part

One of the primary reasons for the astounding spike in buys is the reduction in stamp duty levied on apartment sales, from 5 per cent to 2 per cent from September 1 to December 31, and 3 per cent from January 1 to March 31, 2021 by the Maharashtra government. This is part of the relief measures for real estate and other sectors hardest hit by the lockdown in recent months.

Otherwise, the stamp duty in the state is 5 per cent and 4 per cent in urban and rural areas, respectively, apart from the 1 per cent surcharge in urban areas and 1 per cent zila parishad cess in rural areas. Investors offloading their inventories in developments that they had bought at a premium are also adding to the dramatic depreciation in prices as they are compelled to sell lower, thus strengthening the buyer’s position further.

Mumbai’s realty business is no longer a simple or a compound process, but a variable, with only one constant - it is a buyer’s market, and has been for a while.

Slipping rentals

Luxury rentals too, both residential and commercial, have seen a stark downturn by upto 20-30 per cent. Residential properties at 250,000 rupees per month pre-COVID-19 are available for 160,000 rupees. A 2,000 square feet commercial space on Marine Drive that commanded 650,000 rupees per month will in all likelihood find it difficult to get even 400,000 rupees given the negligible human footfall in the largely residential sea-facing block.

The Kala Ghoda area in downtown Mumbai commanded fashionably high rents pre-COVID-19 for the last decade ever since fashion designer Sabyasachi opened his flagship store in 2010. Up until then, Kala Ghoda was a cultural nucleus, but Sabyasachi’s arrival inadvertently turned it into Mumbai’s fashion precinct. Despite the high rents, designers are still holding on to their stores and in a bid to stay relevant on the fashion marquee.

A 1,500 square feet store, at the end of Rampart Row, was upwards of 350,000 rupees and is now available for 200,000 rupees. A 1 million per month commercial space can be rented for 700,000 rupees. Rental deposits that were upwards of six months’ rents are now at a more generous three months. The lock-in period too has gone from a standard three years to a variable one- or two.

Lockdown no bar

Realtors in Mumbai have indeed struck gold during the last six months compared to the past year because of the collapsing prices and the reduced stamp duty that is acting as incentives in accelerating the buys. The demand for ready homes versus under-development properties is predominant. The recent demolition of actress Kangana Ranaut’s property in Mumbai on the grounds of illegal construction within 24 hours of giving her notice has further deterred under-construction sales.

No one is willing to risk the bulldozers of the Brihanmumbai Municipal Corporation for any irregularities in their homes and prefer MahaRERA- and BMC-compliant properties with all the legalities in place. That’s not such a bad thing...

- Rubina A. Khan is a lifestyle commentator based in Mumbai.