Real Estate Mumbai

In February 2024, Mumbai's real estate market showed a robust performance with a notable increase in property registrations. IGR Maharashtra reported 11,742 registrations, marking a substantial 21% rise from February 2023 and a 7% increase from January 2024. This surge is the highest for any February in the past twelve years, indicating a strong demand for real estate in India's financial hub.

Factors driving this growth include escalating income levels and a positive attitude towards homeownership. Unlike the peak in February 2022, attributed to post-pandemic pent-up demand, the current upswing is primarily fueled by increased income and a favorable homeownership outlook, according to Knight Frank India's analysis.

Despite the significant surge in registrations, stamp duty collections revenue experienced a 22% year-on-year decline, dropping from Rs 1,112 crore in February 2023 to Rs 865 crore in February 2024. This decrease is linked to exceptionally high collections in February 2023, influenced by the government's decision to limit tax deductions on capital gains from residential property sales after March 31, 2023. However, on a month-to-month basis, stamp duty collections saw a positive increase of 14%.

Homebuyer confidence in the Mumbai market remains strong, with a positive sentiment expected to continue. The shift in apartment size preferences was notable in February 2024, with a rise in the share of smaller apartments (500 sq ft and below) to 45%, compared to 34% the previous year.

Preferred locations for property purchases are the Central and Western suburbs, collectively accounting for over 73% of total registered properties. These areas are favored for their modern amenities, good connectivity, and new launches. Western suburb consumers (86%) and Central suburb consumers (92%) tend to buy within their micro-markets due to familiarity with the location and the availability of properties aligning with their budget and preferences.

Shishir Baijal, Chairman and Managing Director of Knight Frank India, commented on the positive market performance, stating that the Mumbai residential market has maintained exceptional strength in February. The sustained growth in property registrations reflects the market's resilience and allure, expected to continue with robust economic momentum and potential interest rate easing.

In summary, the Mumbai property market is currently thriving, driven by a surge in registrations, rising income levels, and a positive homeownership outlook. Despite a decline in stamp duty collections revenue under specific circumstances, the market displays resilience and growth potential, offering promising opportunities for investors, developers, and prospective homebuyers.

In the South Mumbai real estate market, despite a legal cap of Rs 25,000 on transfer fees, housing societies are reportedly charging substantial amounts ranging from Rs 10 to 30 lakh for flat transfers. A recent incident involving a businessman selling his spacious flat in a luxury tower highlights this practice, with the society demanding a share of the sale amount for transferring ownership to the new buyer. Another example cited involves a seller paying Rs 28 lakh for the transfer of a 2,850 sq ft flat. These charges, often termed as 'voluntary donations,' are calculated as a percentage of the transaction value, typically around 2%, in areas like Lower Parel, Worli, and Prabhadevi. However, in some central Mumbai locations, sellers are reportedly asked to pay Rs 1,200 per sq ft.

While legally societies are only allowed to charge up to Rs 25,000 for transfers, the practice of demanding higher amounts under the guise of donations is widespread, especially in affluent areas like Cuffe Parade, Nariman Point, and Pedder Road. Such fees, collected ostensibly for infrastructure funds, have been criticized as 'arm-twisting' to bolster society or developer reserves. Despite being common across all property segments, this practice has raised concerns about its fairness, particularly in buildings with affluent occupants and well-funded societies.

Real estate experts point out that rising maintenance costs prompt societies to levy higher transfer fees, often categorized as voluntary contributions or donations to circumvent legal restrictions. Resistance to payment can result in delayed or denied No Objection Certificates (NOCs), leading many sellers to comply to avoid transaction delays. Some parties challenge these fees post-payment, seeking refunds on excessive charges. However, societies often justify these charges as exempt from income tax under the principle of "mutuality," which courts have historically upheld.

Advocates emphasize the need for societies to refrain from excessive charging and suggest seeking funds through general body resolutions rather than imposing burdensome fees on individual transactions. Despite legal precedents and objections, these practices persist, reflecting ongoing challenges within the real estate market.

On Sunday, Maharashtra Chief Minister Eknath Shinde inaugurated the foundation laying for Metro Line 12, a significant infrastructure development connecting Kalyan with Taloja in Navi Mumbai. This extension is part of the larger Metro Line-5 project (Thane-Bhiwandi-Kalyan) and aims to enhance connectivity within the Mumbai Metropolitan Region (MMR). The new line comprises a fully elevated structure, encompassing 22.173 km with a total of 19 stations. The estimated project cost is Rs 5,865 crore, and it is projected to be completed by the end of 2027, according to an official release.

Chief Minister Shinde emphasized the considerable benefits that Metro Line 12 will bring to the residents of MMR, emphasizing the shorter and more convenient travel options it will offer between Kalyan, Taloja, south Mumbai, Thane, Mira-Bhayender, and Virar. He stated that the travel time between Kalyan and Taloja is expected to be reduced by 45 minutes once the Metro Line 12 becomes operational. Additionally, Shinde highlighted the strategic integration of Metro Line 12 with Navi Mumbai, foreseeing a new wave of development in the surrounding regions and anticipating growth in businesses.

Expressing optimism about the positive impact on traffic congestion, Chief Minister Shinde articulated the expectation of reduced fuel consumption and pollution. He recognized Maharashtra's significant strides in infrastructure development and economic growth, with the Mumbai Metropolitan Region playing a vital role in this progress. Commending the consistent expansion of the Metro network by the Mumbai Metropolitan Region Development Authority (MMRDA), he affirmed their commitment to sustainable urban development in and around the MMR.

In addition to his involvement in the Metro Line 12 project, Chief Minister Shinde attended a function where the ground-breaking ceremony for the Rs 150 crore Ambernath Shiv Mandir Area Development project was performed in Thane district. During this event, he reiterated the importance of spiritual and religious establishments while emphasizing the state government's prioritization of development.

Mahindra Lifespace Developers, the real estatsqand infrastructure arm of the Mahindra Group, is pursuing an ambitious strategy to achieve a five-fold growth in pre-sales over the next five years. This entails building a project pipeline with a development value exceeding Rs 45,000 crore, a target nearly ten times its existing range of Rs 4,000 crore to Rs 5,000 crore. The company's focus is set on joint developments, housing society redevelopments, and outright land acquisitions in key markets such as Mumbai, Pune, and Bengaluru.

To support this significant expansion, Mahindra Lifespaces plans to deploy over Rs 7,500 crore, utilizing internal funds, capital infusion from the Mahindra Group, and contributions from institutional investors. Recognized as a growth asset in the Mahindra portfolio, the company is committed to receiving resources and investments from Mahindra & Mahindra, its parent company.

In addition to internal funding, Mahindra Lifespaces is open to bringing in a financial partner at either a platform or project level and is considering raising debt, given its low debt-equity ratio. The company's pre-sales for the fiscal year 2022–23 were Rs 1,812 crore, and for the first nine months of the current fiscal year, it stood at Rs 1,243 crore. Notably, the company sold apartments worth Rs 800 crore in its newly launched Kandivali project.

The primary growth focus is expected to come from the residential business, while the industrial segment is anticipated to remain stable. Amit Sinha, MD & CEO, highlighted the positive experience in redevelopment projects, particularly in Mumbai, where the company secured rights to redevelop housing societies in Santacruz and Malad suburbs. Mahindra Lifespaces aims for redevelopment projects with a GDV threshold of Rs 1,000 crore.

Furthermore, the company is looking into horizontal development, as evidenced by its recent project launch in Chennai. Mahindra Lifespaces' current development footprint spans 35.06 million sq ft across seven Indian cities, encompassing ongoing and forthcoming residential projects, integrated developments, and industrial clusters. The existing portfolio includes 14.48 million sq ft across 14 ongoing and five new projects, along with over 5,000 acres under development in various locations.

The Maharashtra government is aiming to enhance the usage of Metro and monorail services by introducing a new Regulation 33(23) focused on transit-oriented development (TOD) zones within the city's Development Control and Promotion Regulations - 2034. These TOD zones will be established within 500m of Metro and monorail stations, as per a government notification. To encourage affordability, the tenement size within TOD zones is set to a minimum of approximately 300 sq ft, similar to a slum rehabilitation tenement, and flats cannot be combined. This initiative aims to attract residents who can utilize these flats for their daily commute.

On February 20, the Mumbai Metropolitan Region Development Authority (MMRDA) reported 80 million ridership for Mumbai Metro Lines 2A and 7 over one year, prompting the government's notification. However, concerns about the gap between ridership estimates and actual demand have been raised. The proposed regulation suggests promoting high residential density in TOD zones, allowing a minimum floor space index (FSI) of 2.25 for a 40,000 sq ft plot, increasing to 4 FSI for a 2 lakh sq ft plot with a 9m road width. On a 27m wide road, a developer can utilize up to 7 FSI on a 2 lakh sq ft plot. FSI dictates the permissible construction on a given plot.

For the underground Colaba-BKC-Aarey Metro Line 3, plans include constructing a vestibule directly connecting to the station, facilitating easier entry and exit for commuters. Architect-activist Nitin Killawala cautioned against further densifying areas around public transport hubs in Mumbai, emphasizing the city's existing congestion. He suggested that this approach may be more suitable for the Mumbai Metropolitan Region, where there are vacant spaces around Metro stations, serving as an incentive for public transport usage. Killawala highlighted the demand for residences near, but not directly in front of, stations in Mumbai, citing price differences between various station areas.