Mumbai witnesses a rise in demand for 2 & 3BHKs, reveals a report. The demand for mid-sized and bigger homes constituted 70% of the total demand.
By Varun Singh
Despite facing head winds in Q2 (April-May-June) 2021, the Mumbai real estate market witnessed a rise in the demand for 2 and 3BHKs, forming up to 70% of the total demand, and translating to a 10% QoQ increase and 18% YoY increase in demand for mid-size and larger homes, shows Magicbricks PropIndex Report Q2.
Accordingly, the demand for smaller homes including 1BHKs was seen declining to 24% of the total demand in Q2 2021-down from 34% in Q1 2021, and 37% in Q2 2020. The neighbouring residential markets of Navi Mumbai and Thane also bounced back with the latter reinstating its position as the most sought-after realty hotspot within the Mumbai Metropolitan Region (MMR).
Various factors have been driving this increased demand for larger homes in Mumbai, including easy and affordable payment plans offered by the developers, extension of the 2% stamp duty benefit, availability of cheaper home loans, and lower margin money (down payment) requirement by banks.
Further, these factors have also been instrumental in limiting the decline in residential demand to just 16% QoQ, as compared to national demand decline of over 23% QoQ. The Government directives to resume some construction activities, with all safety protocols during the lockdown period, also proved to be helpful in arresting the supply decline to just 6.6%.
Commenting on the report, Sudhir Pai, CEO, Magicbricks, said, “Unlike the first wave, the recovery in demand for residential real estate has been faster in the second wave. Strong impetus from the Government and the developers proved to be the right push in time, limiting the contraction in residential demand by the end of the quarter in the residential market of Mumbai. The much-needed support has also been influential in driving consumer demand for bigger homes in Mumbai, which has been historically characterized by a higher preference towards small-sized 1 BHK units, has been observing a high demand for mid-sized and bigger homes in the recent months. All the three residential markets of Mumbai, Navi Mumbai and Thane witnessed price corrections ranging from 0.7%-1.4% during the quarter that also saw rising medical expenses and debt. The recovery can be attributed to factors such as a consistent demand in the large sizes properties and a higher flow of global PE funds ensured by good risk-adjusted returns by the sector. This swift recovery signals a revival in stability in the industry.”
The research also revealed that the western suburbs priced between INR 15,000 -20,000 per sqft in Andheri, Malad, Goregaon, Kandivali, and Dahisar, continued to be buyers’ favourite in Q-2 2021, ascribed to major IT and commercial development along with upcoming metro connectivity in these areas.
Thane witnessed 1.4% growth in prices of residential properties despite a tightening demand as well as supply during the quarter. This growth in prices is the fastest amongst all other areas in the Mumbai Metropolitan Region (MMR), and in line with the nationwide trend. However, there is a noticeable shift in home buyers’ preference of towards under-construction units, ascribed mainly to affordability and the payment flexibility offered.
Navi Mumbai also saw rise in demand due to affordable rates and excellent connectivity. Despite the lockdown and restrictions on construction related activities, Navi Mumbai registered a marginal 0.7% growth in property prices during the quarter ended on June 2021.
Further, as economic and construction activities started to resume from mid-June, the traction in the market is expected to rebound to normal level thereby increasing residential supply and demand in the city.
Also Read: Can Stamp Duty Cut Boost Homebuying?