Mumbai: Affordable homes drive realty market in H1 2019

The city's realty market has witnessed a growth both in terms of new units launches and in sales volumes, mostly driven by affordable housing, concentrated in the peripheral locations in the January–June 2019 (H1 2019). Homes that are below Rs 50-75 lakh have seen maximum transactions. The residential market in Mumbai is today mostly driven by the end-users.

Knight Frank, in its report, said the launches growth tapers to 22% year-on-year (YoY) during H1 2019, after registering a stellar 220% YoY growth in 2018. There were 43,822 residential launches against 35,874 in the corresponding period last year. The housing units sold witnessed 4% growth at 33,713 against 32,412. However, on account of launches being higher than the sales, the unsold inventory levels in Mumbai Metropolitan Region (MMR) have inched up 14% YoY to 136,525 units during H1 2019.

''While this growth is noteworthy, there is a rise in the unsold inventory in this period, putting the market at a risk of inventory overhang in the near future. We should hope to see this momentum carry forward to create a trend. However, that would depend on the macroeconomic indicators that would further inculcate confidence, in the end, uses to enter the market,'' Knight Frank said in its report.

Further, the report says that homebuyers are yet to benefit from RBI's policy rate reductions as 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 as most developers have opted for earlier GST regime for 12% with ITC for on-going projects.

Knight Frank executive director Gulam Zia said the mood of residential realty in Mumbai continues to be sombre and withdrawn.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," he noted.

As far as the transaction activity in the Mumbai Metropolitan Region (MMR) off market is concerned, it has grown by 61% at 4.6 mn sq ft. There were several large transactions in H1 2019, which involved occupiers from the Banking, Financial Services and Insurance (BFSI) segments, Other Services sector and co-working players.

In H1 2019, new completions dropped by 56% year-on-year (YoY) at 1.9 mn sq ft.