Are there no Buyers for Luxury Apartments in Mumbai?

1. Are there no Buyers for Luxury Apartments in Mumbai? Skyrocketing rates of luxury homes in Mumbai have forced buyers to change their decision to buy. Due to this, luxury apartment inventory is piling up in the city. According to a real estate report, there are around 5000 up-market flats in Mumbai waiting for buyers. The report also stated that if the each luxury apartment costs approximately 10 Crore INR, the total value of unsold apartments can be estimated to be around 50,000 Crore. Mumbai is livable but not affordable? As per a leading international rating agency, Mumbai is one of the most livable cities in the country. It was ranked second on the list of cities that are ideal for living in India. However, when it comes to affordability, apartments in Mumbai’s prime areas are beyond the reach of middle or upper-middle classbuyers. As per a Knight Frank report, a premium property in Dubai is more affordable compared to buying a luxury property in Mumbai. Since there are limited buyers for high-end apartments in Mumbaiand the response has been lukewarm, many developers in the cityhave no choiceleft but to cut down the rates and start constructing homes that are small in size so that the units become affordable for a large segment of buyers. As per a report by Liases Foras, many developers have now started launching residential projects that fit the demand of potential buyers. Earlier, huge homes were being built with large balconies and state-of-the-art amenities and these units were available at a huge price. But now with the changes in buyer’s preferences, developers are also changing the size of apartments in the city. If real estate reports are to be believed, sales are tepid in areas in central Mumbai such as Mahalaxmi, Lower Parel, Parel and Prabhadevi. In these areas, apartments are spread in 4000 to 7000 square feet, having four to five bedrooms. They are available at 25,000 to 30,000 INR per square feet. In 2014, proportion of new launches in the luxury segment went down by 6% in metros including Mumbai. Reportedly, developers are taking time to sell luxury apartments in Mumbaiand they are also holding back on launching new premium projects as the demand is subdued. On an average, it takes not more than two to four years for executing a residential or commercial project. The builder sells all the units within this period. But as per reports, in South Mumbai, the inventory period has increased from 40 months to 60 months which is a huge difference. In Mumbai’s Metropolitan Area, around 1.69 Lac housing units have not been sold. This has pushed the builders to reduce the size of luxury apartments in Mumbai. The weighted average rates have also reduced from 20,449 INR per square feet from last year to 20,089INR per square feet this year. If you have been planning to make aninvestment in Mumbai’s luxury property market, it would be advisable to wait and watch for the rates to go down further.