What is going in Mumbai and Pune real estate markets?

In this post, we analyze a three-year trend cycle spanning across Mumbai Region and Pune residential real estate markets.

Sales
Revenue-wise Mumbai Region is the largest property market in the country. In terms of sales, Mumbai scores over Pune. The Graph shows sales trends spread across the two key markets of Maharashtra.
Frequent upheavals are visible across the two markets. A glaring dip recorded in the second quarter of the FY 16-17 can primarily be attributed to the introduction of RERA in May 2016. As the market stabilized going forward, sentiments improved. The implementation of GST in the second quarter of FY 17-18, however, did not immediately affect the market.
The Pune market, however, presents a dismal picture right until the start of 2018. The market boomed subsequently with sales as well as the project launches growing steadily.
A thing common in both the cities is a dip recorded in the last quarter of the FY18-19. It appears the NBFC crisis and revision in the GST tax slab caused some flurry in the market.

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Marketable supply
A look at the marketable supply over the past three years shows a lot of swing in the two markets. Developers have continued to launch projects across different cost brackets in order to cater to the affordable, budget, mid-segment, upper-mid segment as well as luxurious segment buyers. The new supply is still getting added. It shows that the developers are confident about improved sale volumes in the coming days; Alternatively, they may be taking advantage of positive measures announced by Union government in the latest Union budget to boost the real estate sector. The measures introduced were a waiver of high GST rate on under construction property as well as scrapping notional rent levied on ready inventory.
The composition of the supply being introduced in the market in recent times has changed. Motivated by government sops and incentives, a significant portion of the new supply remains focused on the affordable segment. A similar pattern can be noted in other cities as well apart from Mumbai and Pune.
Though less profitable for the developers, the affordable segment is considered safe since it is easy to find takers for such flats.

Per square foot rate
In a positive for homebuyers, property rates have remained stable over the years. The rates have been more or less the same throughout the four quarters year after year in the two cities.
Property prices in MMR had gone up in FY 2017-18 however prices came down over the next few quarters showing signs of stabilization. In fact, in the last quarter, prices dropped to the lowest level in the past three years. The Pune real estate market has been slipping with property rates falling up to 13% over the period from 2016 to 2018. Having reached a record low during Q3 FY 17-18, prices started stabilizing over the subsequent quarters.
Muted sentiments of buyers and low investor confidence after the NBFC crisis has resulted in piling up of inventory. Developers have started bringing rates down to clear off the unsold units.

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