Real estate: September figures for Mumbai are positive

Apartments worth over Rs 10 mins recorded quick sales. YTD records at ~ 86,000 units are up about 3 times from a low base.

The number of housing units registered in Mumbai as of September 21 jumped 39% year-on-year to 7,804 (up 15% month-on-month); it was September’s best performance in a decade. And compared to the pre-pandemic period of September 19, registrations are 94% higher. In addition, 94% of listings relate to sales of new homes against ~ 45% from April to August of this year. Apartments worth over Rs 10 mins recorded quick sales. YTD records at ~ 86,000 units are up about 3 times from a low base.

With the decline of the second wave, we believe that sales of real estate in Mumbai would pick up; this will particularly benefit Godrej Properties, Oberoi Realty, Macrotech (Lodha) and Sunteck Realty.

Mumbai records support the upward trend; new sale catapult
Monthly registrations in Mumbai in September jumped 39% year-on-year to 7,804 units; that September 20 benefited from a lower stamp duty makes the current performance all the more encouraging. MoM registrations also increased by 15%, a sign of buoyant demand for housing. The overall value of units registered as of September 21 stood at ~ Rs 106 billion (up 17% year-on-year, 26% month-on-month).

According to Knight Frank, 94% of homes registered during September 21 were fresh sales. For Maharashtra as a whole, registrations in September to 97,873 units were down 7% month-on-month and 23% year-on-year. YTD registrations in Mumbai at ~ 86,000 units are up about 3 times from a low base.

Average ticket size up to MoM in Mumbai
The average note size in Mumbai in September increased 9% month-on-month to 13.6 million rupees (down 16% year-on-year). This is more or less in line with the average banknote size of Rs 13.4 mins during CY19. According to Knight Frank, the share of houses worth Rs 10 minutes and more rose to 49% in September, against 30% in April and 40% in June. This marks a trend reversal – on a growing share of affordable units.

Outlook: Organized Developers Should Benefit
As previously stated, consolidation is the main feature of the Indian real estate space and Covid-19 has only accelerated the process. We believe home sales in Mumbai will pick up as the city fully opens up after the lockdown; While matching the performance of FY21 in the absence of stamp duty relief is a big challenge, we believe the housing market is recovering nonetheless.

We believe that organized Mumbai-based developers such as Godrej Properties (BUY), Oberoi Realty (BUY), Sunteck Realty (BUY) and Macrotech Developers (BUY) will benefit from the resumption of home sales in Mumbai.

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