2/3 of Mumbai's housing stock priced over Rs 1 cr

More than two-third of the unsold housing inventory in Mumbai is priced above Rs 1 crore, well beyond the reach of most of the city's prospective home buyers. 

Currently, there are about 33,500 residential apartments in this category out of a total 44,032 units. About 83 percent of the housing units launched in the second quarter ended June fall in this price range, showed a JLL India study covering projects within Mumbai's municipal limits. 

Although the proportion has come down from 90 percent at the end of April due to some new launches in suburban locations, it is still overwhelmingly high for a city where only a limited percentage of residents can afford ticket sizes of over Rs 1 crore.

"The need of the hour is to reduce the size of apartments and undertake value engineering of construction cost to ensure more home buyers can afford houses in Mumbai," said Ramesh Nair, COO & International Director, JLL India. 

Over the past few years, developers have been steadily reducing the average unit sizes to suit the budget of a majority of home buyers in the city. The reduction in average unit sizes has been the highest in Mumbai at 26.4 percent in the past five years. The average unit sizes in Mumbai have been the lowest among Indian cities. 

Apart from reducing apartment configurations, developers are also tweaking their strategies to cater to the large segment of consumers. 

"We all know that below Rs 1 crore is where majority of the demand is and would like to capture this attractive segment. But how many of us can do it within city limits, given the current land prices and development premiums that need to be paid upfront? That is why developers are also looking at places beyond Thane and Navi Mumbai where they can offer apartments in the affordable category," said Sunny Bijlani, director, Supreme Universal.

Development charges and premiums to be paid to the civic authorities form 30-35 percent of the project cost and these premiums have increased over 300 percent in the past three years, he said, adding that Supreme Universal is also in talks for land parcels in Badlapur and Ambarnath for affordable housing ventures.

With land prices and development premiums that continue to move higher, proportion of houses priced above this price range are expected to go up marginally in the near term launches. However, experts are of view that even the government needs to review the scenario and consider measures to ease the pressure.

According to Nair, apart from reducing taxes, government needs to improve infrastructure and connectivity. Also creating more growth corridors with economic activity will encourage, and not force, people to reside in suburban locations too. Moreover, during the launches in the second quarter, only 3.21 percent of the apartments under Rs 31-65-lakh bracket are in the size and none under the Rs 30-lakh bracket in Mumbai.

Pitted against pan-India figures, the numbers are highly skewed towards the higher ticket sizes in Mumbai. Very few units in the affordable range were available from all these launches and mostly were in the suburban locations. Even if one looks at the overall inventory, there is very little stock Rs 65 lakh in the affordable range of and below in Mumbai's municipal limits. 

ET View 

Mumbai needs inclusionary housing. We need a strong foundation of proactive policy to boost housing stock. For affordable housing, we need to do away with the most pernicious provisions in the Rent Control Act, which discourage renting out of dwelling units. The floor space Index needs to be done away with and we should instead seek to augment supportive infrastructure. We also need inclusionary public housing in Mumbai. Further, a trans-harbour link would open up vast tracks of land for housing. The Bandra-Worli Sealink has meant access to no new land.