Units of one and two-bedroom were the most sold, which made up over 85 percent of total sales
The total of number of under construction residential units registered under MahaRERA are estimated at 670,339 across 5,620 projects. Of the total units registered, as many as 350,000 units remain unsold leading to an inventory overhang of 52 percent as of August 31, 2017, says a joint report by Cushman & Wakefield, leading global property consultancy and Propstack, leading real estate data analytics and workflow solutions firm.
Units of one and two-bedroom were the most sold, which made up over 85 percent of total sales. With over 50 percent of the current residential inventory remaining unsold, the prices of projects have been largely stable even as the momentum in launches of new projects has been slow in MMR region.
The report also says that more homes are to be delivered as per the timelines promised. Nearly 76 percent of all ongoing projects are to be completed by 2020. As many as 42 percent of all projects registered under MahaRERA are heading towards timely completion. As many 2,300 ongoing projects have estimated on-time or before time completion, while another 2,300 projects (43%) of total projects are expected to see delays of up to 36 months as per the date. 2018 is expected to see the largest volume of the completion of under-construction projects at 1,454.
The report which analyses Mumbai Metropolitan Area (MMR) projects registered with MahaRERA by August 31, 2017 records that a total of 5,620 projects including residential and residential cum commercial projects that cover 506 million square feet (msf) of development. Areas beyond Thane witnessed the maximum number of project launches and registration in MahaRERA at 1,835 projects constituting 33 percent of total projects registered, says the report.
Availability of land at cheaper rates along with incentives by the government to create affordable housing have been the major reasons for many developers venturing to these locations to create large-scale residential projects at affordable pricing. Despite the distance from commercial hubs such as South Mumbai, Central Mumbai and BKC, micro-markets beyond Thane, have been throwing up viable residential options at multiple price points. Western suburbs including the belt stretching from Bandra in the south to Borivali in the north saw the 1,400 projects making up 25 percent of the total registrations. Eastern Suburbs (18%), Navi Mumbai (12%) Thane (7%) and South Mumbai (5%) completed the rest.
“Availability of land at the lower prices is a crucial parameter that allows developers to keep the per unit prices under check. Maximum end-users are value sensitive and would like to get maximum benefits out of their purchases. Locations beyond Thane allow developers to create homes that deliver value beyond just habitat. These areas are well connected through public transport including suburban rail and roads, and give developers the confidence to launch large scale projects in these areas,” said Gautam Saraf, Managing Director, Mumbai, Cushman & Wakefield.Total sold units are estimated to be 319,000. One and two bedroom configurations had the highest share of sales constituting together of 87 percent. Sales of three bedroom configurations made up 11 percent, while even higher configurations were a mere 1 percent of the total inventory sold. The end-users’ affinity towards smaller configurations has been due to the high real estate prices in the MMR region. Even while the capital values of affordable houses across most micro markets have not seen any drastic changes, when compared to other cities like Bengaluru, Delhi NCR and Pune, these are higher by at least 10 percent to 15 percent for comparable projects and locations.
|Category||Total Stock||Unsold||Inventory Overhang||Sold Unit||% sold|
(Source: Data collated by PropStack and Cushman & Wakefield Research from MahaRERA)
“As more and more projects register for MahaRERA, the market, including end-users, will have better access to information on developers and projects. For end-users, having all information upfront will help them to assess the final product upon receipt. While MahaRERA has its judicial job cut out, having structured and authentic information on the development sector will help in future planning and understanding as the cities of Maharashtra expand. The data will help us create better, sharper analysis of demand as well as design future supply to help avoid demand – supply mismatches,” said Sandeep Reddy, Director, PropStack, India.Maharashtra’s early adoption of Real Estate Regulatory Act (RERA) will ensure that more projects get the requisite funding for completion of projects from domestic and international funds. While currently registered projects are still facing a backlog of challenges, these should ease out in the coming months through various funding options such as structured debts, JVs, equity investments and sales. We also expect the scheduled retail banks to make greater participation after RBI’s relaxation on possible exposure banks can have to real estate. Further, we expect the end-user purchase activities to start picking up in the next few months as RERA gives buyers a safety net for their investment. Thus, with improving sales momentum and better project management processes in place, we expect investors to show greater confidence towards the sector and increase their fund allocation to residential real estate,” said Saraf.