NAREDCO Maharashtra and 1 Finance Reveal Key Insights on Greater Mumbai's Real Estate Market
A recent report by NAREDCO Maharashtra and 1 Finance highlights the high property prices and low affordability in Greater Mumbai's real estate market, emphasizing the need for regulatory reforms and collaborative efforts to address the challenges.
Real EstateGreater MumbaiNaredco1 FinanceAffordabilityReal Estate MaharashtraNov 18, 2024
The event was graced by several distinguished industry figures, including Dr. Niranjan Hiranandani, Chairman of NAREDCO National; Mr. Rajan Bandelkar, Vice-Chairman of NAREDCO National; Mr. Prashant Sharma, President of NAREDCO Maharashtra; Mr. Ridham Gada, President of NAREDCO Maharashtra NextGen; and Mr. Rajesh Doshi, Secretary of NAREDCO Maharashtra, among other key industry leaders.
Over the past decade, India's residential real estate sector has undergone significant transformations, influenced by economic shifts, regulatory reforms, and evolving consumer preferences. These changes have set the stage for the current market dynamics and challenges, especially in major metropolitan areas like Greater Mumbai.
The report revealed that the average price per square foot (PSF) in Greater Mumbai stands at INR 32,150, with 29% of homes sold in the region priced above INR 2 crores. Notably, Greater Mumbai's affordability for the affluent middle class is the lowest among India's top cities, underscoring the significant challenges faced by homebuyers in this competitive market.
Despite these challenges, real estate remains a compelling investment option. Over the past decade, real estate, including rental yields, has delivered an average return of 12%, which is on par with gold and higher than the 7% average return on debt. Real estate also offers unique benefits, such as a balance of returns and security, making it an ideal asset for diversification.
Prospective homebuyers in Greater Mumbai can benefit from thorough research, a long-term investment perspective, and a deep understanding of local market dynamics. By focusing on high-potential micro markets, leveraging the inherent advantages of real estate, and partnering with reputable developers, buyers can secure a home in Greater Mumbai while positioning themselves to benefit from this stable and multifaceted investment.
The report also provides insights into the correlation data based on the last 10 years (as of 30th June 2024). Real estate has a low positive correlation with equity (0.12) and debt (0.22), indicating that its performance is not strongly linked to the fluctuations in these markets. It has a negative correlation with gold (-0.15), suggesting that real estate and gold tend to move in opposite directions. These correlations highlight real estate's distinct behavior as an asset class.
Mr. Prashant Sharma, President of NAREDCO Maharashtra, emphasized the need for regulatory reforms, including the rationalization of premiums and streamlining of approval processes. He stated, 'To succeed, we need strong collaboration between the public and private sectors. NAREDCO Maharashtra is committed to working closely with government bodies, financial institutions, and other stakeholders to create a more efficient and inclusive real estate ecosystem. Our focus remains on driving the 'Housing for All' and 'Affordable Housing' initiatives.'
Mr. Keval Bhanushali, Co-founder & CEO at 1 Finance, added, 'We are proud to present India's first unbiased real estate price indices for top cities. At 1 Finance, we believe that real estate advisory should be a standard part of India's financial planning framework. This report marks a significant step towards achieving this goal, offering a thorough analysis of the market that will be valuable for homeowners, developers, and policymakers alike.'
Mr. Ridham Gada, President of NAREDCO NextGen Maharashtra, highlighted the pressing affordability challenges in Greater Mumbai's real estate market. He said, 'To address these challenges, we need a collaborative approach between developers, policymakers, and financial institutions. NAREDCO Maharashtra NextGen is committed to driving innovation, supporting regulatory reforms, and advocating for affordable housing to ensure Mumbai remains a thriving global metropolis with accessible homeownership for all.'
The affordability issue in Greater Mumbai is closely tied to government policies and premiums. While these policies are intended to regulate development and fund urban infrastructure, they have become a double-edged sword in the Mumbai context. This affordability crisis has not only inflated property prices but has also led to a significant reduction in apartment sizes, which has serious implications for the quality of urban living.
The way forward for a more affordable and sustainable real estate market in Mumbai is clear. It calls for decisive action, collaboration between public and private sectors, and a commitment to long-term urban planning. By addressing these critical issues, Mumbai can not only overcome its housing challenges but also strengthen its position as India's premier metropolis, setting a standard for urban development across the country.
In conclusion, the report underscores real estate's importance as a stable investment, offering significant returns. To overcome affordability challenges in Greater Mumbai, a collaborative approach between developers, policymakers, and financial institutions is vital. By fostering innovation and regulatory reforms, Mumbai can enhance homeownership accessibility and reinforce its position as India's leading metropolis.
Frequently Asked Questions
What is the average price per square foot in Greater Mumbai's real estate market?
The average price per square foot (PSF) in Greater Mumbai's real estate market is INR 32,150.
What percentage of homes in Greater Mumbai are priced above INR 2 crores?
29% of homes sold in Greater Mumbai are priced above INR 2 crores.
What are the key benefits of investing in real estate in Greater Mumbai?
Real estate in Greater Mumbai offers competitive returns, averaging 12% over the past decade, and provides a balance of returns and security, making it an ideal asset for diversification.
What are the main challenges faced by homebuyers in Greater Mumbai's real estate market?
The main challenges include high property prices and low affordability, particularly for the affluent middle class, which is the lowest among India's top cities.
What steps are being taken to address the affordability crisis in Greater Mumbai?
Steps include regulatory reforms, rationalization of premiums, streamlining of approval processes, and collaboration between public and private sectors to create a more efficient and inclusive real estate ecosystem.
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