NAREDCO Maharashtra and 1 Finance Unveil Insights on Greater Mumbai's Real Estate Market

A comprehensive report by NAREDCO Maharashtra and 1 Finance reveals high property prices and low affordability in Greater Mumbai's real estate market, emphasizing the need for regulatory reforms and collaborative efforts to address these challenges.

Greater MumbaiReal EstateProperty PricesAffordabilityRegulatory ReformsReal Estate MumbaiNov 18, 2024

NAREDCO Maharashtra and 1 Finance Unveil Insights on Greater Mumbai's Real Estate Market

Real Estate Mumbai:1 Finance, a financial services institution focused on personal finance in India, has partnered with NAREDCO Maharashtra NextGen as the Research Partner for Excelerate 3.0. The event saw the launch of a detailed research report on Greater Mumbai's real estate market, covering pricing trends, transaction volumes, and inventory levels. The report was attended by prominent industry figures, including Dr. Niranjan Hiranandani, Rajan Bandelkar, Prashant Sharma, Ridham Gada, and Rajesh Doshi, among other key industry leaders.

The residential real estate sector in India has seen significant changes over the past decade, driven by economic shifts, regulatory reforms, and evolving consumer preferences. These changes form the foundation of the current market dynamics and challenges, particularly in Greater Mumbai and other major metropolitan areas.

Key insights from the report reveal that the average price per square foot (PSF) in Greater Mumbai is INR 32,150, with 29% of homes sold in the region priced above INR 2 crores. Affordability for the affluent middle class in Greater Mumbai is the lowest among India's top cities, highlighting the challenges faced by homebuyers in this competitive market.

Despite the challenges, real estate has consistently delivered competitive returns compared to other traditional investments such as equities, debt, and gold. Over the past decade, real estate, including rental yields, has offered an average return of 12%, which is on par with gold and higher than debt, which averaged 7%. Real estate provides unique benefits, offering a balance of returns and security, making it an ideal asset for diversification.

For prospective homebuyers in Greater Mumbai, the key lies in conducting thorough research, maintaining a long-term investment perspective, and understanding 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 option.

The correlation data, based on the last 10 years (as of 30th June 2024), shows how real estate compares to other asset classes. 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. In contrast, equity and debt have a relatively low positive correlation (0.16), while gold has a minimal correlation with all other asset classes. These correlations highlight real estate's distinct behavior as an asset class compared to more traditional investments like equities, debt, and gold.

Commenting on the release of the research report, Mr. Prashant Sharma, President of NAREDCO Maharashtra, stated, 'The report makes a compelling case for regulatory reforms, including the rationalization of premiums and streamlining of approval processes. 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, shared his perspective on the report '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. Our mission is to elevate real estate to its rightful place as a legitimate investment class, alongside other traditional options. 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, commented, 'This research highlights the pressing affordability challenges in Greater Mumbai's real estate market. To address these, 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, driven by high property prices, 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 (PSF) in Greater Mumbai's real estate market?

The average price per square foot (PSF) in Greater Mumbai 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.

How does real estate compare to other investment options in terms of returns?

Over the past decade, real estate, including rental yields, has offered an average return of 12%, which is on par with gold and higher than debt, which averaged 7%. This makes real estate an ideal asset for diversification.

What are the key recommendations from the report for improving the real estate market in Greater Mumbai?

The report recommends regulatory reforms, including the rationalization of premiums and streamlining of approval processes, and a collaborative approach between the public and private sectors to create a more efficient and inclusive real estate ecosystem.

How is the affordability issue in Greater Mumbai's real estate market linked to government policies?

The affordability issue in Greater Mumbai, driven by high property prices, 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, inflating property prices and leading to a reduction in apartment sizes, which has serious implications for the quality of urban living.