The country's financial capital Mumbai has recorded a 36 percent year-on-year jump in the registration of residential properties during October at 7,929 units on higher demand during the festive season and reduction in stamp duty by the Maharashtra government, according to a report.
As per Knight Frank India's report 'Mumbai Residential Snapshot October 2020', the residential sector of Mumbai recorded the highest ever registrations in October over the last 8 years.
The registrations during October jumped by 42 percent MoM and 36 percent YoY, boosted by a stamp duty cut and the festive mood of Navratri and Dussehra.
Source: Department of registrations and stamps, Government of Maharashtra, Knight Frank Research
During the same period last year i.e. in October 2019, registrations had grown 44 percent MoM compared to the previous month, highlighting the demand during the festive period every year. However, it is noteworthy that this year, despite the pandemic impact, sales grew by almost a similar proportion.
One of the biggest catalysts for this growth has been the reduction of stamp duty by 300 bps, which has been further matched by developers who have offered to absorb the remainder, thus significantly reducing the total outflow towards new home purchases, the report said.
The Maharashtra government reduced the stamp duty rate from 5 percent to 2 percent for the period from September 1, 2020, till December 31, 2020, and to 3 percent until March 31, 2021, to counter the adverse impact of the pandemic on the ailing residential real estate market of Mumbai.
It is important to note that even after the stamp duty cut in September 2020, the state government's revenue collections from stamp duty have increased in October 2020 to Rs 232.8 crore compared to Rs 176.4 crore in August 2020.
This shows that the boost to housing sales has more than compensated for lower duty and hence benefitted the state government in terms of revenue collections.
Moreover, the Reserve Bank of India (RBI) cut the policy interest rates by over 120 bps in year-to-date (YTD) 2020. This reduction, coupled with humongous liquidity infusions by RBI, helped banks bring down the home loan rates to historic lows which have helped augment the homebuyer’s loan eligibility by around 10 percent, as per the report.
"As end-users are highly discerning, factors like lower home loan rates, reduction in stamp duty along with the incentives provided by the developers, have helped buyers realise greater value from their purchases," said Shishir Baijal, chairman and managing director, Knight Frank India.
The developers innovated on their marketing prowess to include financial benefits, discounts, and easy payment options to attract buyers during the period of lockdown. Developers were also able to garner buyer interest through the active usage of digital platforms during this period to engage with customers.
The demand momentum in this market is likely to continue buoyed by the festive demand and recovery in the economy.
Commenting on the report, Ram Raheja, director, S Raheja Realty said the upswing in the sale of residential real estate was mainly backed by two reasons; realisation of the real value of owning a home and buyers who were on the fence closing deals to gain the benefit of the reduction in stamp duty charges until December 31, 2020.
"After witnessing volatility, people are now looking for reliability as a major factor and real estate is the most promising asset-class to cater to this need. This has created a need-state and further stimulated demand for residential properties in Mumbai. Due to the above factors, the premium buyers find this a suitable time to upgrade, and hence, the luxury segment is doing really well and expected to further improve over the next few months," Raheja added.
Krish Raveshia, chief executive officer, Azlo Realty is of the view that the decision of slashing the stamp duty prices and other measures have been successful and have given the desired impact by creating the right sales environment.
"At large, the government and sector have acted as stimulants to boost demand and supply. Festive season coupled with pent-up demand has added to the overall cheer in sentiment. Many fence-sitters have taken the plunge. Commercial real estate too has managed to show positive momentum post unlock down phase," Raveshia said.
(Edited by : Jomy)
First Published: IST