Mumbai is expected to witness additional demand of 189,000 units for mid and high-end segment in the next 5 years while the supply in these categories will be 140,806 units

Where does Mumbai figure?

Mumbai is expected to witness additional demand of 189,000 units for mid and high-end segment in the next 5 years while the supply in these categories will be 140,806 units. Of the total demand in these two segments, majority (70%) will be seen in the mid-priced housing, but will remain underserviced by 50% in the next five years. Majority of the mid-segment supply is also expected to be in the Greater Mumbai regions of Thane District and Raigad District due to affordability issues within the city.
However, given the current high costs of land, raw materials and other input costs, the per square foot rate for mid-range apartments is not really expected to come down. The scarcity of land is leading to the construction of more high-rises even in the suburbs, which push up the costs and prices further. As a result, developers are decreasing the sizes of the units to keep the overall ticket price low and affordable.
The demand in Mumbai’s residential market is created mostly by migrant population, a phenomenon that lasted for close to a century. However in recent times, it is noticed that largest population influx has been in cities with predominance in manufacturing, and services such as IT/ ITeS, banking, insurance, financial services, and engineering, amongst others as they support a large manpower base. This highlights less dependence on any one sector in sharp contrast to other markets. The existing high real estate costs further dissuade many migrants and even companies from shifting to the city.
Based on regular estimates, the high-end segment, which expects a demand of 56,000 units, will be over supplied by 33%. However, the maximum future supply is estimated to be within the Rs1 crore to Rs 3 crores price bracket with a 63% share in the total current supply in the pipeline. Given that the city has the highest per capita GDP in the country, as per Mumbai’s standards, this supply would be deemed to fall within the upper end of the MIG segment.
Thus, it is expected that there is still sizeable demand in the above Rs 3 crore price bracket. This is borne out by the number of high-rise towers that have been launched and are currently in construction within the city. These high-rise towers offer luxurious spaces and finishes, ultra-modern facilities and amenities, superior construction and designs and are resplendent with lifestyle offerings that are comparable to the best in other international cities. In 2011, more than 3,500 luxury units were launched and around 1/3 of last year’s numbers have been launched in this year so far mostly in areas like Worli, Wadala, Goregaon and Dadar.