Real estate sales in Mumbai zoom during the festival season

Homebuyers in Mumbai are gravitating more towards under-construction projects and pre-launches as developers hit the market with new supplies buoyed by the concessions granted by the state government.

Sale of apartments during Dasara was good, says Ritesh Mehta, Senior Director, Residential Services, West India at JLL.

Real estate firms typically compile the numbers on a quarterly basis and the October-December sales would be published sometime next January.

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“We are seeing more uptake towards under construction and not ready to move in apartments. Since September last year and June this year, sales were dominated by the ready to move in inventory,” Mehta said.

The uptake that started from July-August in Mumbai residential sales is majorly because of the new launches and under construction projects. Ready to move in is in very limited supply in Mumbai and even if there are supplies, the developers are not giving cut-throat discounts, which used to be the case last year, Mehta said.

“So, the ready to move in trend is changing and the cycle is getting healthier with people diverting their minds and decisions towards pre-launches,” he added.

Real estate consultants link the changing trend to pre-launches and new supplies coming into the market.

In the last five years, the market in Mumbai saw only stale launches, phase wise launches of repeated project without new supplies coming in.

“Those were old projects which people didn’t take interest in. This year, we are suddenly seeing new locations coming up, new developments coming up, all thanks to the initiatives taken by government. It was a smart move,” said an executive with a real estate consultancy.

Concessions in approval cost

Last year, the Maharashtra government introduced concessions in the approval cost of redevelopment projects which had to be paid upfront by the developers.

Further, the government also cut stamp duty rates on real estate transactions to boost sales hammered by the pandemic.

“Because of this, sales happened, builders collected money, paid concessions to the government, new supplies came. So, in the 12-month cycle, the ready to move in almost got exhausted,” the real estate executive said.

As the primary sales boomed, the developers managed liquidity to pay the concessions. Most of the developers have gone for the concessional scheme and they are all gearing up for launches for next three months, which starts from Dasara. This trend will continue for 2-3 months.

The rule in Mumbai is once buyers pay 10 per cent of the due amount, as per RERA, the apartment must be mandatorily registered. Builders are giving buyers 30 days to pay the 10 per cent and given the liquidity in the market, most buyers are willing to pay within the timeline.

The normal thumb rule in the last 3-4 years is that 50-55 per cent are primary sales while 40-45 per cent will be secondary sales.

“This time we are seeing around 60-65 per cent would be primary sale and the re-sale deals have gone down to about 30-35 per cent in the third quarter of CY21. That clearly shows that developers’ stock are being sold more,” said Mehta, noting that the next two quarters “looks bullish”.

“It’s fuelled by growth in stock markets, there is a liquidity both from the developers side and also the consumers side, which is a healthy scenario. In the last 7-8 years, there was a mismatch when developers had the money to meet the projects, there was no liquidity in the market,” he added.