Mumbai real estate shows mixed signals as affordable housing segment continues shrinking: Report

Mumbai's property market is showing mixed signals, with overall registrations remaining strong while the affordable housing segment continues to shrink. According to senior executive director at Knight Frank India, Gulam Zia, despite global economic challenges and volatility in equity markets, residential transactions in Mumbai have not experienced any significant slowdown.In February, Mumbai recorded over 12,000 property sale registrations, with daily closures surpassing 430 units. Zia noted that while some analysts paint a bleak picture of the market, "Mumbai's numbers have remained consistent for the past 2 to 2.5 years, even seeing gradual month-on-month growth." However, he cautioned that this overall positive trend hides deeper issues within the market's structure.The most concerning issue, according to Zia, is the shrinking affordable housing segment. "Affordable housing, particularly properties priced below Rs 1 crore and even below Rs 50 lakh, used to account for the largest share of sales in Mumbai. However, this segment has contracted rapidly, now accounting for barely 25%, down from 29%—a nearly 20% decline," he explained.This decline is further exacerbated by a slowdown in new launches within the affordable housing segment, indicating pressure on both the resale market and new supply.Additionally, rental rates in redevelopment areas have risen sharply. Zia explained that rent increases in Mumbai are driven largely by redevelopment projects launched in the past year or two. Displaced residents often have to find rental properties for extended periods, as long as the redevelopment takes to complete, causing further pressure on the rental market.Zia also noted that while retail properties, such as malls, continue to face stagnant demand and high vacancy rates, the office space market is seeing growth. Office space demand in India is on the rise, with over 70 million square feet of office space leased last year, and strong performance continuing into the first two months of this year.