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Residential launches in Mumbai grew by 22% (YoY) in H1 2019; sales grew by 4% (YoY) in H1 2019: Knight Frank report

62% of all launches in sub Rs 7.5 million ticket size; 82% below Rs 10 million ticket size

Knight Frank, Residential market, Mumbai, Half yearly report, Gulam Zia

Knight Frank India launched the 11th edition of its flagship half-yearly report - India Real Estate. The report presents a comprehensive analysis of the residential and office market performance across eight cities for the period January-June 2019 (H1 2019). The report findings establish that the number of residential launches in Mumbai increased by 22% in H1 2019 to 43,822 from 35,874 in H12018. The housing units sold saw an increase of 4% in H12019 to 33,731 from 32,412 in H12018.

Mumbai’s office market witnessed 61% increase in volume of office space transacted in H12019 to 4.6 mn sq-ft from 2.9 mn sq-ft in H12018. The other services sector, which includes media, consulting, ecommerce, co-working, etc. continued to dominate transaction activity in H12019 garnering 39% share of total transactions followed by BFSI at 34%.

Residential market highlights of Mumbai: 

The launches growth tapers to 22% year-on year (YoY) during H12019, after registering a stellar 220% YoY growth in 2018.
* 62% of the launches during H1 2019 were in the sub-Rs 7.5 million ticket size and 82% were below INR 10 million ticket size
* Thane market witnessed the largest quantum of new launches on account of new projects launched by some of the country's biggest corporates
* During H12019, sales in MMR grew marginally by 4% YoY to 33,371 units
* Sales in H12019 were affected by two major events- GST ambiguity and election uncertainty
* Homebuyers yet to benefit from RBI’s policy rate reductions, banks have passed on only 10-30 bps out of the 75-bps cut by RBI in 2019
* GST change has failed to enthuse homebuyers; most developers have opted for earlier GST regime for 12% with ITC for on-going projects
* Peripheral Central Suburbs witnessed the highest sales growth in MMR of 9% YoY during H12019 followed by Thane at 7% YoY
* Affordable houses continued to drive sales in H12019, relatively affordable markets of MMR – Thane, Peripheral Central Suburbs and Peripheral       Western Suburbs combined, grew by 6% YoY during H12019. However, sales in the pricier BMC markets grew only by 3% YoY in the same period
* On account of launches being higher than the sales, the unsold inventory levels in MMR have inched up 14% YoY to 136,525 units during H12019
* Quarters-to sell (QTS) for the MMR market went up from 8 quarters in H12018 to 8.5 quarters in H12019. The current QTS of 8.5 quarters should not be interpreted as a sign of a healthy market. Over the past few years, in MMR, launches have constantly surpassed sales since H22014 till H12017

Gulam Zia, executive director, valuation & advisory, retail & hospitality, said, “The mood of residential realty in Mumbai continues to be sombre and withdrawn. With more skeletons tumbling out of NBFC cupboards the shadows on Indian housing industry are getting longer. The respite offered in the finance bill may still not be able adequate to pull the sector out of its current situation. to rescue a few more developers who’re already on the brink of an imminent collapse. Affordable housing segment has emerged as a silver lining in these dark clouds. The finance minister has announced more sops for this segment to step closer to the dream of “housing for all”. The developers who desire to remain relevant after this catastrophic period of downturn will have to recalibrate their business models and focus on creating more affordable homes.”

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September 2019
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