In Mumbai two third unsold apartments have priced above Rs 1 crore, beyond the reach of potential home buyer’s
Unsold Apartments in Mumbai
In present, there are more than two third unsold real estate inventory related to housing sector is priced above Rs 1 crore, which is much beyond the reach of normal potential home buyers. There are about more than 33,500 residential apartments in this particular category out of total 44,032 units. More than 80 per cent residential units were launched in the second quarter of June 2015 and they all fall in this price range, as per the latest reports and data statics of JLL India, which study covers all residential projects in Mumbai municipal limits. However; this proportion has come down from 90 percent which was in first quarter of 2015 at the end of April it was just because of the launch of new residential project in the suburban locations, but it is still overwhelmingly high for a Mumbai, where the number of buyers are limited which can afford ticket sizes of over Rs 1 crore in property deal.
According to the statement of Ramesh Nair, COO & International Director of JLL India, “IT is the need of hour to reduce the size of apartments to reduce the ticket price of apartments and undertake value engineering of construction cost to make sure that potential home buyers can afford the houses in Mumbai”. We all know that from past few years developers are steadily reducing the size of residential units to make it fit in the budget of potential buyers, who are in majority in Mumbai city. According to recent survey, the reduction in average unit sizes is highest in Mumbai which is about 26.4 per cent in the past three to five years and Mumbai have been the lowest average unit sizes among other Indian cities. Apart from reducing the size of residential units, real estate developers are also tweaking their strategies to cater the demand of affordable housing in the city like Mumbai.
As per the statement of Sunny Bijlani, Director of Supreme Universal, “We all are aware that below Rs 1 crore is price which majority of home buyers can afford and we would like to capture it because it is attractive segment, but it’s not an easy task because only few real estate developers in Mumbai which can do it within city limits as per current land prices and development premiums that need to be paid up-front. And this is the main reason why developers are looking for the locations beyond Navi Mumbai and Thane as there they can develop apartments for the affordable category”. The more he added that, project development charges and premiums can be paid to the civic authorities from 30 to 35 per cent as per the cost of project and these premiums have increased by more than 300 percent in past two to three years. However; Supreme Universal is also in process for the land parcels in Ambarnath and Badlapur region with an aim to develop homes for affordable segment.
With higher land price the development premiums will continue to move higher because major proportion of units priced above than this price range and it is expected that it will go up marginally in the near term launches. However; according to the experts now it’s time when government needs to review the scenario to ease the pressure in real estate market on Mumbai. The more they added that in present we need a strong foundation which can boost the housing stock for affordable segment because Rent Control Act. is discouraging renting out of dwelling units. According to Nair, after reducing taxes government should to improve the connectivity as well as infrastructure of the city for better life standard. And they should also create more economic activity, which will encourage the people to buy apartment in suburban regions.
