The residential market in Mumbai witnessed subdued growth in the first half of 2012 in the back drop of high interest rates. While there was a decline in supply addition compared to the second half of 2011, the stock of unsold inventory increased during the review period. These are the findings of CBRE’s latest report titled “Market View India Residential.”
South and Central Mumbai, which offer premium residential options, have witnessed limited supply during the first half of 2012. Developers adopted a cautious approach due to large inventory of unsold stock in these micro-markets.
Residential demand continued to remain upbeat for premium properties along the Western Express Highway and Link Road in the Western Suburbs (Bandra, Khar, Santacruz, Vile Parle and Andheri) and the Eastern Express Highway and JVLR in the Eastern Suburbs (Vikhroli, Kurla, Ghatkopar, Chembur and Powai).
Demand also remained high along the Extended Suburbs of Western and Eastern Mumbai. There was an increase in demand for premium projects in locations around the Bandra Kurla Complex and the moderate supply in these locations ensured a steady appreciation in capital values.
Commenting on the findings of the report, Anshuman Magazine, Chairman and Managing Director of CBRE, South Asia Pvt. Ltd said, “While Mumbai continues to be a prime residential investment market in the country, affordability and credit costs have become critical issues guiding residential demand in the city. High interest rates and weak investor sentiment have taken a toll on the real estate sector in the city. A downward revision of interest rates by the Central Bank might encourage buyers and investors to revive purchase decisions in Mumbai.”
Locations such as Navi Mumbai and Thane continued to witness investor interest, largely guided by infrastructure improvements in the region and proposed development of the airport. The lesser known nodes of Karanjade, Ulwe and Dronagiri in Navi Mumbai that are currently being developed by CIDCO are already witnessing increasing interest from investors due to their proximity to the proposed airport. Similarly, Ghodbunder Road in Thane also witnessed growth in the residential segment owing to comparatively low real estate costs, central location, good infrastructure and connectivity.
