Property sales in the Mumbai Metropolitan Region (MMR) witnessed an active market in 2021 - post the disruptions caused by the Covid-19 pandemic. The Mumbai Metropolitan Region (MMR) includes Mumbai, Mumbai Suburban, Thane, Raigad, and Palghar districts. In addition to factors like pandemic-induced pent-up demand and work from home culture, the Maharashtra State Government also introduced several measures to offset the effects of the pandemic and boost real estate recovery. At TEAL, we analyzed the real estate market in the Mumbai Metropolitan Region (MMR) in light of the pandemic and government measures to boost recovery.
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Property Sales Volume in Mumbai Metropolitan Region (2012 - 2021)
The Mumbai Metropolitan Region (MMR) recorded multi-year high property sales volumes in 2021. The following section breaks down the yearly property sales numbers in different regions in MMR during 2012 - 2021.
Property sales in Mumbai in 2021 were 52.34% higher year-on-year (y-o-y) over 2020 and 58.14% higher than the pre-pandemic year of 2019. The previous annual high before the 2021 levels during the 10-year period was in 2018 - still 32.38% lower than 2021. Property sales in Mumbai witnessed the highest volume in a decade in 2021. Despite being the most expensive market in the country, factors like lower capital values, decade low home loan interest rates, and developer’s offers have made Mumbai more affordable than previous years - contributing to the sales growth in 2021 .
Thane district also registered the highest property sales volume in a decade in 2021. Property sales in Thane in 2021 were 25.1% higher year-on-year (y-o-y) over 2020 and 12.8% higher than in the pre-pandemic year of 2019. During the decade-long period of 2012 - 2021, the second-highest annual high came in the year 2012 - 3.1% lower than the sales volume in 2021.
Raigad district witnessed the highest yearly property sales volume in 2012 and 2021 respectively during the study period of 2012 - 2021.
Mumbai - Property Sales Gain Momentum as Government Implements Recovery Measures
Stamp Duty Holidays
The nation was hit with the first wave of the Covid-19 pandemic in March 2020, with the Central Government announcing a complete lockdown in April and extending it till the end of May . As the property sales market in Mumbai was recovering from the economic slowdown from the previous years, the Covid-19 pandemic caused another disruption in the market.
In the graph above, it can be noted that from January to September 2020, the overall property sales scenario remained sluggish when compared to 2019. To offset the impact of the pandemic on the real estate sector, the Maharashtra State Government reduced the stamp duty rate to 2% and 3% during the period of September - December 2020 and January - March 2021 respectively. The stamp duty rate in the State before the reduction was 5% .
On analyzing the daily property sales data in Mumbai during 2017 - 2021, it can be observed that there was a spike in the property sales volume during the period of stamp duty cuts (October 2020 - March 2021). The stamp duty holidays had a positive impact on homebuyers as the cuts directly reduced the financial outlay when buying a property. With the pent-up market demand, reduced interest rates and stamp duty holidays, the property sales market recovered in late 2020 and 2021.
Despite the second wave of the Covid-19 pandemic peaking in April and May 2021, the sales volume decline was lower compared to the first wave in 2020. The stamp duty was also reverted to 5% from April 2021. However, property sales in the name of women will be given a 1% rebate in stamp duty .
Property sales fell by 45.1% during Q2 2021 (April - June 2021) in comparison with the previous quarter. The period following the second wave has looked promising for the real estate market in Mumbai with July and October peaking at 10-year highs . Q3 2021 registered 41.6% higher property sales volume than Q2 2021, followed by a 3.9% spike in Q4 2021. The previous annual high prior to the 2021 sales volume levels during the 10-year period was in 2018 - still 32.38% lower than 2021.
MahaRERA Extends Project Completion Deadline
In light of the second wave of the Covid-19 pandemic, the Maharashtra Real Estate Regulatory Authority (MahaRERA) invoked the force majeure clause to give a 6-month extension on real estate projects whose completion date, revised completion date, or extended completion date expired on or after April 15, 2021 . Though the impact of the second wave was lower than the first wave, project constructions suffered and sites came to a standstill as the lockdown restrictions affected the availability of labor and movement of building materials . In such unforeseen circumstances, the project completion extension came as a relief to builders.
Reduction in Premium and Charges Accelerate Launches in MMR
The premium charged for real estate development under Development Control and Promotion Regulation (DCPR) was reduced by 50% for a year until December 31, 2021. This move was approved in January 2021. Builders who opted for the 50% reduction in premiums will not charge the stamp duty and registration fees from buyers of this project . This step aided in accelerating launches and investments in the Mumbai Metropolitan Region (MMR). With an increase in revenue and success of this step, an extension was provided till January 31, 2022.
1% Metro Cess in Mumbai From April 2022
The Maharashtra State government plans to charge an additional one percent of cess on stamp duty from April 2022 This move will increase the stamp duty charged on property purchases in Mumbai, Pune, and Nagpur . The decision is expected to impact the home buying sentiment in the said regions where property transactions have been reported all-time high.
The State government’s announcement to levy this additional surcharge of 1% from April 1, 2022, has driven a fresh wave of new property registrations in the city with property buyers seeking to finalize deals before the overall transaction cost increases. With this trend, Maharashtra’s revenue from residential property sales in FY 2022 (April 2021 - March 2022) is set to surpass its all-time high. As of February 2022, the State has earned Rs. 5,671 crores from property registrations - 63% higher than FY 2021 .
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