Property sales momentum in Mumbai leading to a 15% YoY rise; Revenue collection grows by 22% YoY: Knight Frank India

Mumbai: The leading real estate consultancy firm Knight Frank India  in its latest report said that Mumbai city (BMC area) saw property sale registrations of 8,756 units in November 2022, contributing over Rs 671 crore to the state revenues. Growth in property sale registrations in Mumbai continues to remain robust with some moderation recorded in the recent months. November 2022 recorded a 15 percent YoY rise in property sale registrations and 22 percent YoY growth in government revenue collection.

Although both periods November 2021 and 2022 were devoid of any government incentives, November 2022 had an influence of increased mortgage rates and metro cess that increased the stamp duty burden by 1 percentage point.  November 2022 continues to record robust growth in salesNonetheless, despite these headwinds, November 2022 continues to record robust growth in sales. This growth in property registrations can also be accounted for by the sustained momentum from the preceding festival period.

The October month benefited greatly due to the positive market sentiments driven by the festival season. Even though the festival period ends in October the market sentiments continue in November 2022 with property sale registration recording 4% MoM rise. The state government earned a revenue of Rs  671 crore surpassing November 2021’s collection of Rs 549 crore on account of increased contribution from higher value segments and one percentage point higher stamp duty rate.

A jump in property sales between January – November 2022The Period from January – November 2022 has recorded a jump in property sales registrations and revenue collections.  In 2022 the period recorded a 10 percent YoY rise in property sales registration and a massive 50 percent YoY rise in government revenue collections, representing the positive market sentiment driving sales.  For the January – November period the year 2022 has emerged as a best performing year in the last 10 years since 2013.

This performance has come in the backdrop of rising interest rates, input costs and implementation of metro cess increasing the burden on the homebuyer. Focus remains on 500 – 1,000 sq ft area segmentThe share of homes ranging from 500-1,000 sqft accounts to almost half the residential properties registered in November 2022. The share fell from 47 percent in October 2022 to 46 percent in November 2022.

Compact homes continue to hold the second preference with a share take up of 36 percent in November 2022. Homes ranging from 1,000-2,000 sq ft saw a rise in share take up from 14 percent in October 2022 to 16 percent in November 2022 while the share of over 2,000 sq ft homes fell from 3 percent to 2 percent in November 2022. Mumbai residential market has grownKnight Frank India CMD Shishir Baijal said, “Supported by strong consumer sentiment and supportive drivers, the Mumbai residential market has grown despite geopolitical headwinds.

As the festival season that drove market sentiment in the last month ends, November 2022 remains a beneficiary to the sustained momentum recording a YoY rise in property sales and government revenue collection. “”However, the growth rate appears to have moderated marginally due to the increased mortgage rates.  This is evident from the 190 Bps rise in repo rate along with implementation of metro cess in the last 6 months that have translated into a 16 percent YoY drop in property registration in its preceding 6-month period.

Nonetheless, homebuyers are still positive towards the home buying decision, and this should help sustain the recent period growth trends. “Western Suburb and Central Suburb account for 88% of the total marketThe Western and Central Suburb dominate the residential property demand accounting to 88 percent of demand in November 2022. Western Suburbs’ share in total registrations in November 2022 has fallen from 57 percent in October 2022 to 53 percent in November 2022.

Central Suburbs has recorded a rise in share of contribution as compared to October 2022 and has gone from 34 percent in October 2022 to 35 percent in November 2022. Central Mumbai saw a rise in MoM, in property registrations from 5 percent in October 2022 to 6 percent in November 2022. Share of South Mumbai recorded a rise from 4 percent in October 2022 to 6 percent in November 2022.

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