3 Concepts that influence Mumbai's realty market

1. Property Redevelopment

The process of property redevelopment, keeping existing structure in place has been a much exploited technique since over a decade back. Many areas of west¬ern suburbs of Mumbai, like Bandra, Khar, Santacruz, etc., had a huge num¬ber of such redevelopment projects. It is quicker and easier as relocation of old building residents isn't an issue. It is also cost effective as the existing structures are retained with due repairs and renovations taken care of.

However, one of the biggest disadvan¬tages is mixing of the residents. Es¬sentially, the new buyers would pay a huge premium and hence belong to high¬er strata of society compared to the old occupants. This class barrier is reflected as a huge discount on the asking price as not many of the high-end society buyers are willing to share the space with the lower classes. Many handle this by creating sepa¬rate buildings for existing occupants and for free market sale, with enough class barriers in place. This however, necessarily means razing of existing structures to create denser and better planned hab¬itable areas. So, the old occupants are ei¬ther paid off completely or relocated to a part of the same property or elsewhere.

2. Second Homes

Till as recently as a decade back, sec¬ond homes as a concept existed only in the ultra-rich segment of urban society. For Mumbai residents it was Alibaug, Lonavala, etc. Proximity to the primary home played a key role so as to escape to these places over weekends. So, in essence, sec¬ond home markets are very localised with distance between primary and secondary homes not exceeding two hours or 100 kilometres.

The wealth creation in last decade has percolated down in the strata of society and a new breed of upper middle class has emerged with ambitions to match the high society. Exposure to global cities and aspiration for lifestyle products has created a formidable nouveau riche class keen to buy second homes at affordable prices. Practically every urban metro is surrounded by hill-stations, water fronts or private forest areas where the devel¬opers are creating exciting schemes to lure in this class of buyers. Mumbai for example has Khandala, Karjat, Kasara, gatpuri, Panchgani-Mahabaleshwar, etc. emerging beyond Lonavala and Alibaug as second home markets.

However, with private jets and yachts catching the fancy of the elites, those ad¬venturous ones have already broken the distance barrier with many of them se¬curing places in exotic locales of Goa, Maldives, Mauritius, etc.


3. The 2 BHK Flat

About a quarter of a century back, the most favoured configuration with buyers in Mumbai used to be 1BHK with over 50% contribution compared to 2BHK and the rest sharing 25% each. The last two decades have seen few radical changes in real estate environment that has changed this factor. The decreasing average age of home buyers, easy availability of mortgages, im¬proving lifestyles, awareness about glob¬al housing standards, etc., have played key roles in changing the configuration.

Today on an average, over 50% of apart¬ments constructed and sold are in 2 BHK category vis-a-vis 25% of 1 BHK and 25% of the rest. Developers have done their bit in cre¬ating interesting concepts like two and a half BHK apartments to cater to the needs of upwardly mobile households who at present can't afford to buy a 3BHK. Such ingenuities have helped the market to ex¬pand further with more buyers leaning towards these options.