Скачать или смотреть Will Home Prices Crash in Mumbai?

Mumbai Real Estate is in a Crisis

Customer enquiries have dropped. Sales have fallen and sentiment has crashed while Supply of unsold homes is rising and rising

Why is this happening?

To understand that - we need to go back to 2021

In that year the Maharashtra Government announced a big discount to builders for FSI. In simple language - FSI is the amount of area the government allows you to construct on a piece of land. Higher the FSI. More the area or apartments that can be constructed by Builders. But the government charges builders for FSI

And often it is the 2nd biggest cost for Builders. So this discount got builders excited. They moved fast to acquire new projects and get them approved. In 2021 - the builders got permission to build 6x the number of apartments vs a normal year

The discount expired. But the government gave another incentive in the form of higher FSI. This kept the excitement among builders going as rising stock markets boosted sales. And boosted sentiment even more. They kept acquiring projects among forecasts of strong demand at high prices

Companies listed on the stock exchange saw their stock prices rise after every announcement of a new project. This acquisition of projects continued till 2024

This brings us to the Current - 2025

What happened? 2024 was a weak year. For the first 6 months - I believe builders were okay with weak sales as they blamed it on the uncertainty with regards to the General Elections. Then came the June-September quarter which was also weak. Builders felt the monsoon quarter is anyway weak so nothing to worry. It was the Oct-December festive quarter which flopped big that made builders realise things are structurally weak

Why is it weak though?

Simple: Mumbai is now Lower-Parelised

What does that mean?

It means there is too much supply with not as much demand. Lower Parel saw that between 2012-2020 when builders took up large projects and decided to construct many homes at high price points.

Demand at that price was not there. Sales struggled. Prices fell until 2020. Today entire Mumbai is like Lower Parel. Every street has many under-construction projects - especially Redevelopment

In some markets like Bandra, Khar, Santacruz the number of luxury projects will make Monaco smile. In other markets there are many projects but they are offering the same product.

How is the buyer responding?

He is evaluating every project. Earlier if he had a choice of 8 projects. Today he has a choice of 30 projects. This takes time. Earlier if he would make a decision in 3 months - now he takes 7-8 months

Even after that many are not buying because prices for under-construction properties is not attractive. Moreover he is seeing more projects are scheduled to come up. So he is waiting.

There is data that shows data is strong. it’s deceptive.Earlier 10 projects sold 100 homes. Today 30 projects sell 120 homes. So overall sales may have an increase. But individually earlier every project sold 10 homes. Today it is 4.

What next?

Payment plans and discounts. Payment plans have already begun. 10:90 and 20:80 schemes are common. Discounts will be offered when customers come “on the table”

I believe they will not work for most players. Soon discounts and price cuts will become public rather than the boring “on the table” strategy

How should buyers respond?

Firstly: By not being in a rush. Lot of people will push them to buy a home hurriedly. Don’t listen to them. Prices will not rise. If they rise - there will be many projects in pipeline to choose from. It’s the biggest decision of your life. Buy carefully.

Secondly - monitor a project progress for 4 months before Making a decision. Every month you should see construction progress. If no progress - run

Thirdly - look at the price of a home. But don’t look at only the price of the home. You need a good deal but you need it from a good player. There is no point in getting a good deal from a builder who has a shady past and will abandon the project

Lastly - Buy a home only which Meets your budget, size and location. Remember buying a home is easy. But selling a home is tough.

All the best for 2025. #mumbai #mumbairealestate #homeprices #crisis #homebuyers