What will drive Mumbai real estate value by a 5% to 6% growth in 2023?

By Ms. Manju Yagnik, Vice Chairperson of Nahar Group and Senior Vice President of NAREDCO- Maharashtra 

Residential real estate demand and conversion remained strong in India’s primary property markets during the March quarter, with prices rising steadily. This is also the seventh consecutive quarter of year-on-year price rise across all markets. Even sequentially, prices in most areas stayed stable or increased throughout the quarter. The nation’s residential real estate market is poised for another year of robust expansion, supported by significant infrastructure improvements and resurgent housing demand. This is especially true for Mumbai as a market.

Here are some of the key reasons that would enable real estate valuation to increase consistently in Mumbai:

1. Infrastructure Development: Ongoing infrastructural development in Mumbai is one of the main factors boosting real estate values. With initiatives like the Mumbai Metro, the construction of coastal roads, and the expansion of the suburban railway network, the city’s infrastructure has been a focus of improvement in recent years. These programmes improve connection, shorten commutes, and increase the appeal of formerly inaccessible locations for residential and commercial uses. As a result, infrastructure projects will spur a surge in real estate demand as they approach completion in 2023 and contribute to the sector’s overall growth.
2. Economic Growth and Stability: Economic growth, stability, and business expansion can positively impact the real estate market. Maharashtra, one of the most developed states in the country, would be the epicentre of business and growth activities. The Economic Survey, which was recently filed in the Assembly, forecasts 6.8% growth in the state’s economy in 2022-2023. Mumbai is a major commercial and financial hub and the heart of the country’s commercial activities. With growing economic stability, the city continues to attract migrants from different parts of the country, thereby resulting in a constant increase in demand.
3. Demand-Supply Dynamics: A balanced demand and supply equation can contribute to price appreciation. If the demand for properties exceeds the supply, it can create upward pressure on prices. Residential housing demand remains strong in the face of interest rate hikes and price inflation, and it will continue to expand by more than 10% in the current year as well.
4. Investor Sentiment: Positive investor sentiment and confidence in the real estate market can influence prices. Mumbai continues to enjoy political stability, a positive market outlook, and a favorable investment climate which would encourage investors to allocate funds towards real estate, potentially driving up values.

In addition, there is a steady increase in demand for higher-value apartments on higher floors due to population growth in the city and a significant surge in NRI real estate investment in Mumbai. As a result, Mumbai, the country’s largest and most expensive real estate market, has maintained its strong pace of real estate sales in 2023 as consumer attitude towards home ownership remains high. This is despite rising mortgage rates and property costs. The Mumbai Municipal Region (MMR) consequently experienced the highest current five-year property-buying activity.

In conclusion, the top-end Mumbai real estate market is substantial and only competes with the cheap real estate market regarding business volumes. This is despite a few infrastructure issues. Due to the lack of available land, the influx of high-net-worth individuals, and the growth of the IT and finance industries, real estate values have risen. The city’s growth potential remains unabated even if the market still has some issues, such as issues with openness and a lack of infrastructure in some areas.