Exiciting Times for Mumbai Home Buyers

Developers are now offering freebies and discounts to sell projects, as the supply on offer is different from demand segments.

Similar to the trend in other markets, Mumbai also saw fewer (official) launches in 3QFY15 as developers pushed sales at existing projects (with more supply, investor deals still remain high, we believe). Pricing still remains high in certain markets, but is not increasing anymore. More deals and offers are now being followed up with absolute price-cuts at many projects, including those of larger developers and high-value markets.  

The residential market still remains slow and only strong brands are able to sell expensive products. Developers are open to giving discounts and cutting prices, but post definitive interest from buyers. Land buying has dropped and prices are not going up as only 4-5 developers have the capacity to buy land worth more than US$200 mn. Further, developers want to reduce absolute debt, but with changing approvals and increasing costs, we remain skeptical.  

Launches continue to slow down in Mumbai too, with the official launches during the festive season 50% lower than the average of the past 10 quarters. But our channel checks suggest developers are pre-launching projects to investors, offering deals for large projects that are yet to be reported as official sales.

Developers continue to push sales at existing projects, with many introducing discounts in the form of subvention schemes, schemes without interest rates linked to banks and apartment registrations, deferred payment plans and most even offering high discounts on offered rack rates. Our channel checks suggest discounts in certain high-value projects / large developers ranging from Rs 500/sq. ft to even Rs 5,000/sq. ft depending on locations and projects. Having done this, sales continue to hold ground in Mumbai on a consolidated basis.