3 Concepts That Power Mumbai's Realty Market
1. Property Redevelopment
The process of property redevelopment, keeping existing structure in place has been a much exploited technique for over a decade now. Many areas of western suburbs of Mumbai, like Bandra, Khar, Santacruz, etc., had a huge number 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 disadvantages is the mixing of residents. Essentially, the new buyers would pay a huge premium and hence belong to the higher 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 separate 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 habitable areas. So, the old occupants are either paid off completely or relocated to a part of the same property or elsewhere.
2. Second Homes
Till a decade ago, second homes as a concept existed only in the ultra-rich segment of the 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, second home markets are very localised with a distance between primary and secondary homes not exceeding two hours or 100 kilometres.
The wealth creation in the 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 developers are creating exciting schemes to lure in this class of buyers. Mumbai, for example, has Khandala, Karjat, Kasara, Panchgani-Mahabaleshwar, as emerging markets leaving Lonavala and Alibaug way behind.
However, with private jets and yachts catching the fancy of the elites, those adventurous ones have already broken the distance barrier with many of them securing places in exotic locales of Goa, Maldives, Mauritius, Dubai etc.
3. The 2BHK Flat
About a quarter of a century back, the most favoured configuration with buyers in Mumbai used to be 1BHK with over 50 per cent contribution compared to 2BHK and the rest sharing 25 per cent each. The last two decades have seen a few radical changes in the real estate environment that has changed this factor. The decreasing average age of home buyers, easy availability of mortgages, improving lifestyles, awareness about global housing standards, etc., have played a key role in changing the configuration.
Today on average, over 50 per cent of apartments constructed and sold are in 2 BHK category vis-a-vis 25 per cent of 1BHK and 25 per cent of the rest. Developers have done their bit in creating 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 expand further with more buyers leaning towards these options.