Mumbai’s got money and it’s moving in realty, despite the Maharashtra government not extending the stamp duty waiver on property registrations in March earlier this year. INR 420 CR was collected in stamp duties in June 2021 as 7,850 properties were registered in the month compared to 5,640 units registered in June 2019, indicating a growth of 39 percent. However, in May 2021, INR 268 CR was collected in stamp duties due to the calamitous second wave across India – which was roughly half of the INR 534 CR collected in May 2019. Evidently, people have been buying property in Mumbai, albeit in an undefined, heterogeneous pattern.
In fact, prices have increased too, if you can call a slash in prices from a sharp 30% in 2020 to a 20% in 2021. Actor Ajay Devgan bought a bungalow in June spread over 5000 square feet in Juhu, Mumbai for INR 47.5 crore (which would have sold for over INR 60 CR easy, pre-Covid) and he paid a stamp duty of INR 2.37 crore on the purchase. A South Mumbai apartment that was priced at 15 CR went on to sell at 9 CR in the first phase of the pandemic in 2020 with the stamp duty waiver, but commands a selling price of 11 CR now. The reason for the upswing in the most expensive, not to mention glamorous city in India, is that builders and developers have smaller inventories now and they are trying to make some cash whilst the demand is still on the rise, given the pandemic has made forecasts and predictability highly unreliable and inaccurate during these times. Who would’ve thought there’d be 7,850 property buys in a strained and stretched economy, right? Even though it is not a seller’s market, the seller is making some kind of profit.
But property sells in North Mumbai are taking place in a very contrasting pattern to the realty index in South Mumbai. No, it has nothing to do with Bollywood’s residential dominance in the ‘burbs. In Bandra West, a two-bedroom apartment, measuring a 1000 square feet, that lists for INR 4.5 CR, sells at INR 4CR. Clearly the 20% drop in listing prices in South Mumbai are not at play in North Mumbai as there is a paucity of developments in the suburbs and the supply does not match the extensive demand, yet. So, the seller is more rigid with the pricing and gets whatever he/she asks for without having to conform to the South Mumbai pricing index.
Recently, the Brihanmumbai Municipal Corporation (BMC) had set off a dampener with its proposal to increase property tax by at least 14 percent based on ready reckoner rates as on April 1, 2021. Property tax rates are calculated based on the ready reckoner rates of 2015 in Mumbai and the BMC wanted to revise the rates following the current ready reckoner rate. But on June 18th, the Maharashtra government announced that there would be no change in property tax till the pandemic continued, as it did not seem fair to burden people with an increase in the tax. The announcement didn’t just come as a huge relief to home-owners and stakeholders, but assuaged buyer sentiments, leading to a spike in buys in June. It remains to be seen what the next 6 months of 2021 will bring to the realty table, and at what cost, and more importantly, will a structured buying and selling pattern emerge from it all?
This feature first appeared in Gulf News on July 20th, 2021
With all the luxury constructions and developments, there is a new shift in the market of late, that of “aspirational luxury” residences that aren’t remotely luxurious, barring their price points. Priced at 7CR upwards for a 3BHK in the business suburb of the Bandra Kurla Complex in Mumbai, these residences allude to a luxurious lifestyle with cleverly scripted and assertive marketing hype. The insides of these residential towers are at most basic, with a garden path, a swimming pool and some semblance of a gym thrown in, with views of the city’s under-construction skyline off a balcony, masquerading as luxury amenities. Needless to add, it’s a “white elephant” investment for owners as resale inventory is at its lowest and unrealistic rentals dictated by the builder’s team, with few takers, stand testimony to the “mimic luxe” gimmick it’s established on. These kind of constructions need to be reined in, as these will lead to a catastrophically high, over-priced, unsold inventory in the country that will affect consumers far more than the builders.
A luxury apartment in Mumbai valued at Rs70 million will sell, eventually, but time will play a starring role in the sale today. Slashed to Rs55 million at a sizeable paper loss to the owner, it’ll sell within six months to a year. Cutting losses on luxury property investments was unthinkable, the crash of 2008 notwithstanding. I wouldn’t call this a seller’s market – it’s the buyers that decide the when and the where, with no ready money in the market. Realty purchases are entirely need-based and not investment-based, barring corporates who have the money and readily-available loans to enable their investments. Individual investors shirk buying as that entails endless tax probes and exhausting paperwork.
Rubina A Khan 