forewordproperty.magicbricks.com/microsite/buy/propindex/images... · 2018-04-22 · property index...

A prime reason for dampened transaction activity in real estate markets is the mismatch betweenconsumer expectation and the available supply. Can the supply be better aligned with consumerpreference to break this logjam in the residential real estate market? In this first edition of the fifth yearof PropIndex, we take a closer look at consumer preference on various parameters for each city covered inthe study. The insight gained from this consumer analysis can assist in better positioning of projects andlead to better transaction activity in the market.

For example, about 60% of consumer preference is for budget segments in the sub Rs 70 Lakh range.Even within this range, 62% preference is in the sub Rs 50 Lakh budget segment. Further, 41% ofconsumer preference is for 2BHK formats. Therefore, one solution for overcoming the high capital value(s)(Rs/sq ft) can be to develop smaller and smarter formats in the 2BHK category. This can addressaffordability issues by keeping the overall acquisition cost low for consumers. Developers at present seemto be focusing on introducing larger 3BHK category to increase per unit revenue with smaller inventory tosell. Such mismatch between supply and demand is leading to increase in stock of unsold inventory.

Some of the other aspects which the study highlights are top preferred localities for each budgetsegment, top preferred budget range for 3BHK and 2BHK formats, associated top localities and more.

We’ve also attempted a deeper dive into an analysis of consumer preference in a select locality withineach city. PropIndex has access to data on >10,000 such localities across the country. For these localities,we’ve fleshed out the demand parameters on the basis of budgets, BHK preferences and more.

Coming to PropIndex for Apr-Jun 2015 quarter, in line with the tepid activity in the market, the NationalProperty Index witnessed marginal increment. This increment was on account of increase in supplyaccompanied by marginal increase in capital values. Whereas Bengaluru had the highest appreciation inthe City Index at 6%, Delhi saw the biggest decline of 3%. Overall, cities in the west and south saw anappreciation in respective City Index values while north saw a decline.

The City Price Monitor also witnessed a similar trend with Bengaluru and Delhi at opposite ends of thespectrum. The movement in their City Price Monitor was 3% and -5%, respectively. The rental market wasalso fairly stagnant.

These are changing times and we would love to hear from you. Do write to us [email protected] and share yours views on this report and how we could make PropIndexeven better.

You may also share your opinion with #PropIndex on our Twitter handle @magicbricks or connect with uson Facebook at www.facebook.com/ magicbricksTOI.

FOREWORD

Sudhir PaiCEO, Magicbricks.com

IntroductionThis edition of PropIndex is a departure fromthe earlier ones as instead of looking at thedemand-supply analysis at the zonal levelfor each city, it takes an in-depth look at theConsumer Preference in each city acrossvarious parameters. The supply for each cityis captured in the macro level analysis of thelistings data to arrive at the nature andquantum of supply and price movement.The Magicbricks PropIndex is the same ascarried in the previous editions of PropIndex. Consumer Preference AnalysisThe objective of Consumer PreferenceAnalysis is to identify the nuances ofdemand across pertinent parameters toarrive at a holistic picture of what consumerswant in each city. Consumer PreferenceAnalysis is based on the analysis of searchundertaken by consumers onMagicbricks.com. The parameters on whichthis analysis has been done are:lDistribution of consumer preference bybudget: This gives an assessment of the toppreferred budget segments to acquireresidential real estate in the city. It gives anoverall picture of the consumer profile forthat city and helps to understand the natureof demand.l Top Preferred localities by budgetsegment: It helps to understand the toplocalities which people associate with eachbudget segment. This also gives thelocalities in which people are searching forresidential options in a particular budgetrange. It gives the geographical spread ofconsumer preference by budget. Further, italso helps to assess the dominant budgetsegment(s) associated with each locality.Residential projects can be accordinglypositioned in these localities.lShare of the top localities in each budgetsegment: We evaluate the percentage shareof the top 5, 10 and 15 localities for eachbudget segment. This analysis helps toidentify the geographical spread ofconsumer preference in the city. A highpercentage share means consumers arelooking for options in fewer localities whilethe opposite means the consumerpreference is more wide spread. lConsumer preference by BHK categories:We look at the consumer preference by BHK(Bedroom-Hall-Kitchen) category. Thisrelative percentage split across various BHKcategories gives an impression about theoverall affluence of the consumers. The

larger sized 3BHK category tends to have anoverall higher acquisition cost. Largepercentage of consumers preferring 2BHKcategory is indicative of price sensitiveconsumers making efforts to keep theoverall acquisition cost low. lConsumer preference in the 2 & 3BHKcategories: This is a micro-level analysis ofthe two most preferred BHK categories inthe country. Here we look at the mostpreferred localities and budget segments foreach category. In addition, we also identifythe top preferred localities for each budgetsegment. This information helps tounderstand the BHK category which aconsumer associates with each budgetsegment in a given locality. The residentialprojects can be positioned accordingly interms of price points and BHK formats. Thisanalysis has been done separately for 2BHKand 3BHK categories. l Top 10 localities by consumer preference:Here we identify the top 10 preferredlocalities by consumers for each city andtheir share of consumer preference. A highpercentage share indicates the consumerpreference is spread across lower number oflocalities and vise-versa. l Locality level analysis: In addition to themacro-analysis to understand consumerpreference at city level, a further granularanalysis has been undertaken at the localitylevel. This has been done for one locality percity where the top preferred locality hasbeen subjected to this analysis.The objective of locality level analysis is tounderstand consumer behavior at the micro-level and identify the main attributeswhich consumers associate with a locality.The parameter under which analysis hasbeen undertaken is a sub-set of what hasbeen done at the city level. This involvesaspects like preferred residential type, BHKand budget preference and preference under2BHK & 3BHK categories.

Magicbricks PropIndexMagicbricks PropIndex is a tool whichempowers property seekers and investorswith detailed information on the movementof residential apartment prices and supply ofproperties in India. No credible propertyindex can be a function of direct values asthe changes are governed by multiplefactors. Magicbricks PropIndex has takenthis reality into account and produced anindex based on listings of apartments andtheir capital and rental values on the

website. “Magicbricks has over 12.00,000active properties posted by more than 2 Lakh active users in 585+ cities and17,000+ localities. Our users includeowners, agents and developers.”

MethodologyApartment values are based on listings onthe Magicbricks site.These include multi-storey apartments andsingle units on plotted developments,referred to as builder floors onMagicbricks.com.The Index is structured in such a way thatindividual properties are aggregated intotheir respective cities and then to theNational Index. Weightages for PropIndexare based on the supply of properties withinthe locality/city. Based on this structure,PropIndex gives a realistic picture of trendsin price/supply across different propertymarkets. We have used different weightagesfor Listed Price Monitor/Rent Monitor.Therefore, PropIndex along with tablesprovided for Listed Price Monitor, RentMonitor, Yield Monitor and Capital Values,gives an excellent perspective of theproperty market performance in the quarter.While listing sand their values/supplyprovide a level of understanding of themarket, there are meticulous data checks toprevent aberrations creeping in. These arebased on statistical calculations, industryinputs and logical interpretations.The National Property Index (NPI) isindicative of the extent of activity as well asprice movements across cities and localitiesin the major active cities onMagicbricks.com. The index includes the top11 cities, chosen based on their activitylevels, has an individual city report for each.While the NPI and its movement is ofinterest to the expert community of bankers,builders and investors, the PropIndex hasalso taken care to explain the nuances of theindex movements at the locality level thatwould help the huge data base ofMagicbricks.com consumers.The PropIndex is the result of meticulousresearch at the locality level and throughdetailed discussions with experts atMagicbricks.com’s offline and onlineinitiatives. The Indian real estate market isdynamic and the PropIndex reflects thosechanges. Since it is derived from a dynamicdatabase, additions and deletions oflocalities happen as a function of changingmarket dynamics.

METHODOLOGY

There is a wealth of information within these pages. For better readability, we have presented some data as tables and others asgraphs. Between them, you will find how property markets have performed in the Apr-Jun 2015 quarter from differentperspectives – from that of capital appreciation, from a rental/yield realisation perspective and from a supply standpoint. DemandAnalysis section also explains what consumers look for.

We recommend that you evaluate the city report in its entirety and that will provide a rounded perspective of the performance ofthe property market within each city. Here are the details of what you will find in each of the city reports enclosed within:

1. City Property Index – This is a composite index which is a function of supply of properties as well as the average capitalappreciation/drop in various localities of the city in the quarter. The City Index is the weighted average of the average rate persquare foot in that locality and the supply of properties from that locality. Premium localities (with higher average rate persquare foot) as well as localities with higher supply of properties will have a bigger impact on the Index. For example, if thesupply of properties from a premium locality drops, that locality will end up having a lower weightage in the Index which inturn will push the Index downwards (and vice-versa). On the other hand, supply of properties remaining unchanged, theIndex will be influenced by capital appreciation within the locality.

2. Listed Price Monitor – This metric shows the capital appreciation/drop within a locality and is calculated on the basis ofmovement in the “average rate per square foot” within that locality. By and large, the movement in the “average rate persquare foot” reflects capital appreciation/drop. However, in a few select cases, we have observed that the average rate persquare foot moves due to a change in the mix of apartments within that locality (e.g. if the ratio of premium apartments,which command a higher per square foot rate, changes over the quarter). In these few circumstances, the Listed Price Monitorwill, in turn, reflect this input. Such changes have been explained in the text of the City Reports.

3. Rent Monitor – This reflects the rental appreciation/drop within a locality. It is calculated on the basis of movement in the“average rent per square foot” within that locality. By and large, the movement in the “average rent per square foot” reflectsrental appreciation/drop. However, in a few select cases, we have observed that the average rent per square foot moves due toa change in the mix of apartments within that locality (e.g. if the ratio of premium apartments, which command a higher persquare foot rent, changes over the quarter). In these few circumstances, the Rent Monitor will, in turn, reflect this input. Suchchanges have been explained in the text of the City Reports.

4. Yield Meter – Yield is the annual rate of return earned on property. The Yield Meter depicts the gross yield percentagesacross various localities. Gross yield is a ratio of average annual rental value to the average capital value of the property.

5. Capital Value Tables (given in Annexures) – This shows the actual range of prices within which properties were available ineach locality in the quarter. Prices are shown in Rupees per square foot basis, these are the prevailing rates for properties ineach locality.

6. Consumer Preference Analysis – This analysis of consumer demand is based on searches and requirements that usershave performed on Magicbricks.com. The top localities by demand gives an insight into consumer preferences. The demanddata has been used to arrive at various aspects of consumer requirements including Budget-wise analysis, Property typeanalysis and BHK configuration analysis.

7. Editorial Speak – PropIndex has gone from strength to strength – adding more analytics, insights and diverse views inevery edition. To enhance the insights provided by our data, PropIndex now includes city perspectives from editors of theTimes Property.

GLOSSARY & DEFINITIONS

APR-JUN 2015

In line with general lack of activity in theresidential real estate market, theNational Property Index (NPI) has also

witnessed minimal movement over theprevious quarter. This is in continuation ofthe general trend of inactivity observed overthe last 24 months (including the currentperiod between Apr-Jun 2015).

NPI is the weighted average of supply andvalues across 11 cities in India.

Regionally, north India comprising ofDelhi, Noida/Greater Noida, Ghaziabad andGurgaon saw a drop in index values.Compared to this, south and west Indiawitnessed a rise in index values of 4% and2%, respectively. Kolkata in the east alsosaw a drop in index values.

The Index movement in the current Apr-Jun 2015 quarter can be attributed to anaverage 26% increase in supply withmarginal price change. Only four cities sawsome positive movement in prices whileothers either stayed at the same level or sawan overall dip.

Bengaluru emerged as the city withmaximum increase of 6% in index values inthe current quarter. This was followed byHyderabad with 4% increase and Mumbai &Pune with 3% increase each. The largestdrop in city index was witnessed in Delhiwith the index values falling by 3%. Cities innorth India either witnessed a drop in indexvalues or remained at the same levels as inthe previous quarter. Ahmedabad was onesuch city which remained at the same levelduring this quarter.

While the Reserve Bank of India (RBI) didlower interest rates leading to banks passingon the benefit to consumers in terms oflower home loan rates, the same has nottranslated into transaction activity on theground. This general lack of interest byconsumers is also reflected in the HousingSentiment Index (HSI) report which saw afurther decline of 14% in consumersentiments in the Apr-Jun 2015 period.Further, for the first time, hitherto stablemarkets such as Bengaluru, also saw a dropin consumer sentiment.

The markets remain subdued with large

unsold inventory with pricing which wasbeyond the affordability range of consumerslooking to buy.

At the time of writing this report, RBI didnot reduce the Repo Rate as part of the thirdbi-monthly Monetary Policy Statement for2015. This is most likely to keep the homeloan rates at the current level. Consumers arelikely to adopt a further wait and watchpolicy in terms of their buying decision.

Various policy announcements by theCentral and state governments, such asSmart and Amrut cities plan, the list of citieswhich have applied for Smart City status,Make in India, Clean India and Skill Indiahave not enthused consumers to startbuying. Policy optimism needs to translateinto consumer enthusiasm.

IN THIS REPORT:

National Property Index...............1Mumbai.....................................4Annexure..................................15

[National Property Index (NPI)]

VOL 5, ISSUE 1; APR-JUN, FY 2015-16 propindex.magicbricks.com

175

150

125

100

75

50

25

0

100 103 107 113 116 120 123 128 132 134 140 140 141 142 142 144 144 146

JFM’11 AMJ’11 JAS’11 OND’11 JFM’12 AMJ’12JAS’12 OND’12

JFM’13 AMJ’13JAS’13 OND’13 JFM’14

AMJ’14 JAS’14 OND’14 JFM’15 AMJ’15

02VOL5, ISSUE 1; APR-JUN, FY 2015-16propindex.magicbricks.com

NATIONAL PROPERTY INDEX

The City Index for Ahmedabad remainedstable. An increase in supply across alllocalities was observed. Some localitiesposted double digit growth in supply, butmost had low base numbers initially. Over40% of supply in the residential segment isin the Rs 40 -70 Lakh segment.

More than 70% localities in Bengaluruposted an increase in average capital values.A slightly higher number saw an increase insupply as well. Overall, the Bengaluru CityIndex saw maximum appreciation in the lastquarter at 6%. Eastern and south-eastBengaluru comprising of Whitefield,Sarjapur Road and Electronic City was thelargest contributor to supply in the city.Bengaluru remains a price sensitive city withalmost 50% of consumer preference for theRs 60 Lakh budget segment.

Chennai City Index saw a marginalincrement of 1% in the index value. Whilethere was 52% increase in active listings inthe city, the Index remained subdued asonly 44% of the localities witnessed positivemovement in capital values. Overall, thePrice Monitor for the city fell by 1%.

Delhi witnessed a decline in City Index aswell the Listed Price Monitor. Whereas DelhiCity Index fell by 3%, the Listed PriceMonitor saw a decline of 5%. Delhi also sawan overall increase in active listings but only29% of localities saw any positive

movement in price points. In the 71%localities that showed price movements,most posted a decline in capital values.

Indirapuram and Raj Nagar Extensioncontinued to be dominant localities in termsof supply in Ghaziabad. Both togethercontribute more than 50% of total supply inthe market. As has been the general trend inthis quarter, the city saw an increase in thenumber of listings while the Listed PriceLevel remained the same as the last quarter.

In Gurgaon, while there was almost 30%increase in active market supply, a drop inthe average capital values arrested thegrowth of the City Index. Majority of thelocalities noted a rise or drop in the averagecapital values between -5 to +5 per cent.Close to 60% of the tracked localitieswitnessed a drop in average capital values.Sohna Road remained the most preferredlocality in the city.

At 4%, Hyderabad recorded the secondhighest increment in City Index Value afterBengaluru. Western Hyderabad, centered onGachibowli and comprising of otherlocalities like Manikonda and Kondapur,continued to be top localities in terms oflistings. Localities witnessed an average 2%increase in property values. The city also sawan increase in the overall number of activeproperty listings.

The City Index for Kolkata declined by 1%over the last quarter. The localities on an

average witnessed 1% increment in capitalvalues. However, only 45% of localitiesshowed positive movement in capital valueswhile the rest saw a decline of 1% to 7%.Consequently, even an overall increase inlisted properties could not lead to anysignificant change in the City Index.Rajarhat, EM Bypass and Garia continued tobe top localities in terms of availability ofactively listed properties.

Mumbai noted a positive movement inboth City Index and Listed Price Monitor.While the City Index improved by 3%, theListed Price Monitor saw an increase of 2%.The localities also saw an average increaseof 2% in capital values with 67% localitiesshowing positive movement in capitalvalues. Most localities along the WesternExpressway showed an increment in capital values.

Like other cities in the National CapitalRegion, Noida also saw a drop in City Indexas well as Listed Price Monitor. Where theCity Index dropped by 2%, the latterdecreased by 1%. Overall, capital values inall the sectors remained flat with only a fewmanaging between 3%-4% increase. NoidaExtension and sectors along the Noida-Greater Noida Expressway continued tobe the source of most active listings.

With 77% localities experiencing positivegrowth in capital values and an overallincrease in the number of active listings,Pune saw a 3% increase in City Index and a2% increase in Listed Price Monitor. Kharadiand Viman Nagar in north togetheraccounted for most listed properties. Apartfrom them, Wakad and Wagholi alsocontributed to the supply of actively listedproperties in the Pune real estate market.

NATIONAL CONSUMER PREFERENCEANALYSIS

Analysis of consumer preference onbudget lines and juxtaposing the same withavailable supply brings forth the mostimportant issue affecting the market –demand supply mismatch. It is importantto note that consumer preference revealedby search data on Magicbricks website hasbeen used here as a proxy for demand.

-1%

This demand-supply mismatch manifestsitself in two ways. Firstly, in the budgetsegments with strong consumer preference,the supply available falls short of requirement.But, supply exceeds demand in the higherbudget segments. Thus, there is a demandelement which is not serviced in sufficientnumbers while developers are concentratingprojects in the budget segments which havelesser demand.

Therefore, while the budget segmentbetween Rs 30 - 70 Lakh represents 50% ofoverall demand, the corresponding supply isonly 36%. For each individual budget segmentin this range, the average gap in demand andsupply is 4%. However, as the budget rangeprogresses, the mismatch first becomes zeroand then reverses trend i.e. the percentageshare of supply in these budget segments ismore than the percentage share of consumerpreference. Hence, while the Rs 1 Crore andabove segment comprises one quarter ofconsumer preference, the share of supply is36%. The budget segment between Rs 70 Lakhto Rs 1 Crore seems the only one which ismatched in terms of demand and supply.

The propensity of developers to launchprojects in higher budget segments is also

evident in the mismatch between BHK wisepreference and available supply. As the graphshows, while the 1 and 2BHK segments have ademand-supply mismatch, the situationreverses in case of 3BHK and above segment.

This mismatch adversely impacts theaffordability of home buyers. Formats of 2BHKare smaller in size (sq ft) and this helps to keepthe overall acquisition cost low. Almost 80% of2BHK options across 11 cities covered in thisstudy are under 1200 sq ft of built-up area.Within this range, the 1000-1200 sq ft built-uparea segment forms the largest componentwith 40% overall share. As compared to this,64% of 3BHK options are in the range of1200–1800 sq ft built-up area. Here again,1400-1800 sq ft range forms 46% of overallsupply. Therefore, for the same capital value(Rs/sq ft), a 3BHK of 1400 sq ft will cost atleast 27% more than a 2BHK with 1100 sq ft.

By this logic residential stock in the budgetand BHK segment with relatively less supplyshould be doing well. However, the subduedlevel of activity in the market belies this. Thereason being that projects within the budgetrange of a consumer may be situated inlocalities or zone of a city which is notpreferred while projects in preferred localitiesmay be out of budget range for a consumer.

Till this mismatch in consumer preference andsupply at various levels is addressed, alongwith improvement in economic condition, themarkets are likely to remain subdued.

03VOL5, ISSUE 1; APR-JUN, FY 2015-16 propindex.magicbricks.com

Consumer Preference &Supply in BHK segments

The draft of Mumbai’s Development Plan 2034 wasscrapped due to blunders

Several projects are delayed due to lack of clarity onthe city's proposed development plan

Nariman Point may not re-emerge as Mumbai’s powerlocation, said a report

As it happened

Maharashtra govt to recommend a proposal of 10potential Smart Cities to the Centre

MMRDA receives highest-ever bid for Transfer ofDevelopment Rights under an auction

Bandra Kurla Complex becomes 15th most costly officemarket in the world

Builder can’t unilaterally terminatean agreement, a commission ruled

Govt reversed exemption for somebuilders for building extra areas

About 17 lakh families in Mumbaigot property tax relief in May

State govt to appoint a regulatorybody to safeguard home buyers

1% tax on the value of transfer forproperty above Rs 50 lakh

Online permission of building plansto come up without intervention

MUMBAI 04VOL5, ISSUE 1; APR-JUN, FY 2015-16propindex.magicbricks.com

The City Index increased by 3% while the Listed Price Monitor had an increment of 2%

[CITY INDEX]Mumbai City Index reverses the trend and witnesses a healthy increment in the Apr-Jun 2015 quarter

MUMBAI REAL ESTATE IN PERSPECTIVE Q1 2015

MUMBAI

HOT NOT

175

150

125

100

75

50

25

0

100 102 104 113 111 117 117 121 126 127 131 133 134 134 138 136 128 132

JFM’11 AMJ’11 JAS’11 OND’11 JFM’12 AMJ’12JAS’12 OND’12

JFM’13 AMJ’13JAS’13 OND’13 JFM’14

AMJ’14 JAS’14 OND’14 JFM’15 AMJ’15

3%

MUMBAI05VOL5, ISSUE 1; APR-JUN, FY 2015-16 propindex.magicbricks.com

[PROPINDEX - MUMBAI]Mumbai witnessed the third highest increase of 3% in the City Index in the Apr-Jun 2015 quarter. This wason account of increase in the number of active listings as well as 67% of monitored localities witnessing apositive movement in capital values. The Listing Price Monitor for the city accordingly increased by 2%.

l In the Apr-Jun 2015 quarter, Mumbai sawthe third highest increase in City Indexand second highest increase in the ListedPrice Monitor. The City Index increased by3% and the Listed Price Monitor by 2%

l This was because 67% localities saw anincrement in capital values, leading to anaverage increase of 1% across localities

l Most of the prime suburban areas saw anincrement in the capital values

l Peripheral areas address 63% preferencewhich falls in the sub Rs 1 Crore segment.As the budget segment increases in value,availability of options in suburban andcore city areas also increases

l Higher the budget segment, closer is thepreferred locality to city center

l Smaller BHK formats help to keepacquisition cost low. Consequently, thedominant BHK category by preference are1BHK and 2BHK. Mumbai is the only citywith established large scale preferenceand development of 1BHK formats

l Format of 3BHK is preferred in highbudgets in prime suburban localities

l Kharghar is the most preferred localitywith 5% share of consumer preference

l Distribution of listings by budget reflectsthe varied price points found acrosslocalities in Mumbai.

l A unique feature of listing distribution bybudget is that each segment, withexception of very high budget segments,has a fairly even share of preference

l The percentage distribution of 1BHK,2BHK and 3BHK formats reflects thebudget distribution of available listings

l The percentage share of 1BHK format inthe supply is lower as compared topercentage share of consumer preference

l The dominant built-up area (sq ft) in the3BHK category is 1400–1600 sq ft withoverall built-up area ranging from 1400–1800 sq ft accounts for 68% ofactive listings

[Key Takeaways]

Relaxed FDI norms, conducive interest ratecuts, facilitation of REITs and attempts todecrease ambiguity through the ‘Real EstateRegulatory Bill’ are fostering growth. Supportfrom the BFSI fraternity and housing financeinstitutions facilitates Indian buyers.

India continues to attract massive foreigninvestment in infrastructure, commercial andhospitality. The clear mandate of the newGovernment and its efforts in an endeavourtowards achieving policy transparency andliberalisation in FDI are noteworthy.

Studies point out a deficit of six crorehomes in the country. The ever-growingpopulation, shifting socio-economic standardsand the population’s rising affluence compelsbuyers to push the housing demand.

In Mumbai, an under-construction

property can be traded at discounted prices tofully finished projects within the same vicinity.

According to the study ‘Dreaming withBRICS’ by Goldman Sachs, the Indian economyis expected to continue growing at the rate of5% or more till 2050. With over 50% youthpopulation, there will be consistent demandfor homes and better lifestyles.

The government is modifying the DC rules.Buyers will have a seamless process whereinlesser permissions and a single windowclearance will be introduced.

There are too many choices. Byculla, isattracting buyers; the opening of theSantacruz- Chembur link road has broughtVikhroli closer to the western suburbs; with thefinal clearance being sanctioned for thedevelopment of the Navi Mumbai airport, the

developer community and residents havereason to celebrate; the next phase of themonorail will connect Chembur withMahalaxmi in South Bombay and Malad,Kandivali and Borivali in western suburbscontinue to demonstrate steady appreciation.

The cabinet committee said that aninterest subsidy of 6.5% for a tenure of 15 yearswill be given to the EWS and LIG, giving them abenefit of about Rs 2.3 lakh each.

Mumbai is seeing an increase in thenumber of expats buying/renting apartments,thereby making the NRI section, a large part ofpotential home buyer’s profile.

Contrary to popular perception pertainingto Mumbai’s realty, it is showing signs ofrecovery and emerging almost unscathed. Andthat indeed is the reality of Mumbai’s realty!

Why ‘now’ is the right time to invest in Mumbai’s realty…

[email protected], Editor - Times Property (Mumbai)

EDITORIAL


[Distribution of Consumer Preference by budget]Consumer preference spread across large budget spectrum

[CONSUMER PREFERENCE ANALYSIS]

Budget 1 2 3 4 5

Upto 30 L Panvel Virar Nallasopara Kalyan Vasai

Rs 30-40 L Panvel Ulwe Mira Road Virar Kharghar

Rs 40-50 L Ghatkopar West Mira Road Kharghar Panvel Kamothe

Rs 50-60 L Mira Road Kharghar Ulwe Kamothe Ghodbunder Road

Rs 60-70 L Kharghar Mira Road Ghodbunder Road Kamothe Ulwe

Rs 70-80 L Kharghar Mira Road Ghodbunder Road Thane West Kandivali West

Rs 80-1Cr Kharghar Mira Road Kandivali West Ghodbunder Road Borivali West

Rs 1-1.6Cr Kharghar Kandivali West Andheri East Borivali West Malad West

Rs 1.6 -2Cr Borivali West Andheri East Andheri West Mulund West Kandivali West

Rs 2-2.6Cr Andheri West Andheri East Chembur Kandivali West Borivali West

Rs 2.6-3Cr Andheri West Andheri East Kandivali East Chembur Bandra West

Rs 3Cr & Above Bandra West Andheri West Chembur Khar West Kandivali East

[Top preferred localities by budget segment]Higher the budget segment, closer is the preferred locality to the city center

l For the purpose of analysis, data for Mumbai,Thane and Navi Mumbai has been consideredas one entity. Unless stated otherwise, theinformation for all three zones will becollectively referred to as Mumbai

l Budget wise distribution of consumerpreference and locality preference underdifferent budget segments reflect the linearnature of city development and associatedprice gradients

l Nearly 63% of preference is in thesub Rs 1 Crore segment. Consideringthe price gradient, most of thisdemand can be met in localities inthe north or north east of the VasaiCreek along the Western and Centrallines, respectively. Other options arelocalities in Navi Mumbai likeKharghar, Nerul, Sanpada and Airoli.Even in these localities, the size ofapartments is likely to be small tokeep the acquisition cost down

l As the budget segment increases invalue, availability of options in thesuburban and core city areas will also increase

l Evaluation of consumer preferenceshows that for higher budgetsegments, suburban areas on theWestern line like Kandivali (West),Andheri (East) and Andheri (West)and Chembur on the Harbor line arethe preferred localities

l For the premium segment of Rs 3 Crore and above, prime localitieslike Bandra (West), Khar (West) andthose south of Mahim Creek arepreferred destinations


Consumer preference is concentrated in fewer localities.

[Share of top localities in each budget segment]

When consumer preference is concentrated in fewerlocalities, prices tend to go up as demand rises.When supply is spread across larger geography,demand spreads across more localities and thiskeeps a check on rise in prices. This does not apply tothose areas where supply is extremely high andproperty prices are very low.

l The concentration of consumer preference in fewlocalities for all budget segments is also a manifestationof the liner nature of development in Mumbai

l The city has grown broadly in south to north directionalong three principal lines of Mumbai Suburban Railwaysystem. Capital values decrease as one moves out fromthe city center along these three development axes

l Mumbai lacks width for expansion, further narrowingthe development corridor and pushing the developmentin the northern direction

l Consequently, the consumer preference under eachbudget segment is met by a small set of localities whichare generally aligned in the east-west direction

l As one moves into higher segments, the localities whichmeet thepreference move south towards the city center

l The share of top localities is low as they meet consumerpreference in a small budget range


[Consumer preferences in the 3BHK category]Format of 3BHK format is preferred in high budget segments

[Consumer preference by BHK categories]Smaller BHK formats help to keep acquisition cost low

l With 11% consumers looking for 3BHKoptions in Rs 5 Crore and above budget, it shows that the 3BHK segment catersmainly to higher budget segments

l Most of the preferred localities, withexception of Kharghar, are situated in thesuburban areas of the city

l Locality like Kharghar and northernsuburban areas most likely meetsconsumer preference in sub-Rs 1.5 Croresegment

l For higher budget segments, consumersprefer prime suburban areas and localitiesin central and south Mumbai.

l Therefore, localities like Bandra (West),Khar (West) and Lower Parel dominatethe Rs 5 Crore and above segments

Top PreferredLocalities

Top PreferredBudget Segment

[Top preferred localities for 3BHK category and budget segments]Western and eastern suburbs dominate preference in 3BHK category

Budget (Lakh) 1 2 3 4 5

Rs >500 Bandra West Khar West Lower Parel Walkeshwar Andheri West

Rs 200-210 Kandivali West Kandivali East Kharghar Andheri West Andheri East

Rs 300-310 Chembur Andheri West Kandivali East Andheri East Versova

Rs 350-360 Chembur Kandivali East Andheri West Chembur Malad East

l High capital values in the city make 1BHKand 2BHK as the most preferredsegments with 45% and 41% preferenceshare, respectively

l Mumbai is the only city with establishedpreference and development of 1BHKformat in the country

l Consumers prefer 1BHK format as itallows them to keep the overallacquisition cost low and also avail optionsin their preferred localities. For example,the average size of 1BHK option would bein 700sq.ft – 900sq.ft range in Mumbaiand this smaller size keeps the cost ofownership low for a buyer

l The 2BHK format assists a buyer inchoosing a relatively bigger format in hisbudget range

High capital values inthe city make 1BHKformat a viable optionfrom both demandand supplyperspective. It is themost prefered formatin almost all localities


l Top 10 localities account for 31% share, showing thatdemand is spread across a wide number of localities

l Each locality serves a certain range. As the budgetrange shifts, so does the preference

l Kharghar, Navi Mumbai, is the most preferredlocality in the area

l This is followed by localities in the northern suburban or peripheral areas of the region

[Consumer preference in the 2BHK category]The 2BHK format serves consumer preference for ‘larger’ formats

areas of Navi Mumbai (Kharghar andKamothe)

l The Rs 90 Lakh to Rs 1.7 Crore budgetforms 37% of preference in the 2BHKcategory. Higher budget segments arefavored in suburban areas such asAndheri (West) and Chembur

l In slightly lower budgets in the abovementioned range, suburban areas northto them like Kandivali (West), Kandivali (East), Borivali (West) etc. arepreferred by consumers

Top PreferredLocalities

Top PreferredBudget Segment

[Top preferred localities for 2BHK category and budget segments]Peripheral and suburban areas are preferred for the 2BHK segment

l The consumer preference for the 2BHKsegment is spread across a large budgetspectrum in the city

l Keeping in line with the developmentpattern noted across the city, the smaller

the budget segment, the farther away isthe locality

l Most preferred localities for this segmentare the northern peripheral areas ofMumbai (Mira Road) and the peripheral

[Top 10 localities by consumer preference]Kharghar leads as the most preferred locality in the region

Budget (Lakh) 1 2 3 4 5

Rs 120-130 Kandivali West Borivali West Kandivali East Thane West Andheri East

Rs 60-70 Mira Road Kharghar Kamothe Ulwe Ghodbunder Road

Rs 70-80 Kharghar Mira Road Ghodbunder Road Kamothe Ulwe

Rs 140-150 Malad West Ulwe Kharghar Kamothe Panvel

High capital values inMumbai city duringthe Apr-Jun 2015quarter make the1BHK format a viable option from both the demand andsupply perspective


l Dominant consumer preference in thelocality is for 2BHK segment followed by1BHK category. While the former accountsfor 48% share, the latter category has37% share. This is in line with consumerpreference trend observed over last 8 quarter.

l However, the share of 1BHK segment hasincreased from 29% in July-September2013 to 37% in last quarter. This could bedue to firming up of capital values in thelocality which would necessitateconsumer opting for smaller format tokeep the acquisition cost low.

l The share of 3BHK category over last 8 quarters has fallen from 21% in July-September 2013 to 14% in April-June2015. This could be due to increase incapital values in the market whichincreases the acquisition cost and makeslarger format like 3BHK less affordable

[LOCALITY LEVEL ANALYSIS - KHARGHAR]

l In line with the overall trend in themarket, the dominant preference inlocality is for multistory apartments itshas 78% share of overall consumerpreference by residential category in the locality

l In addition to this, about 14% ofconsumer preference is for residentialhouse segment while 8% consumers arelooking for residential plots for selfconstruction of houses

l Given the density of development andgeneral lack of supply of land, the scopefor horizontal development is limited.

l Consequently, credible options inresidential house and residential plot arelikely to be very limited. Further given thehigh capital value prevalent in the locality,such options would have very hightransaction value. These would fall under consumer preference in higherbudget range

[Consumer preference by residential category]Apartments is the most preferred format

[Consumer preference by BHK category (apartments)]The 2BHK remains the preferred format in the locality


l The graph above shows the budgetsegments most associated with consumerpreference in the locality for variousresidential options and historic trend ofthis variable over 8 quarters, includingApril-May-June 2015.

l As can be seen in the graphs, consumerpreference by budget in a given locality is heterogeneous and each locality has adominant budget range associated with it.This is a reflection of both supply andconsumer’s perception about the locality.

l The budget preference in Kharghar can bedivided into four broad categories – Rs 40Lakh to Rs 60 Lakh, Rs 80 Lakh to Rs 1Crore and Rs 1 Crore to Rs 1.5 Crore. Thepercentage share of each category is 26%,24%, 16% and 14%, respectively.

l Historic trend analysis shows thatconsumer preference in lower budget (Rs30 Lakh to Rs 60 Lakh) segment hasgrown. While few budget segments in Rs60 Lakh to Rs 1 Crore segment have seen amarginal increase, the preference share of

most has declined. This also holds true forbudget segments beyond Rs 1 Crore

l One possible reason for increase consumerpreference in lower budget segmentscould be due to spillover demand fromother localities. As other localities, whichare more favorably located in NaviMumbai and adjoining areas mature andwitness rise in capital values, theconsumer preference which cannot beaddressed in these localities will spill intonext adjoining locality

[Top 10 budget segments for a given locality]Locality serves consumer preference across a wide budget range

[Budget preference by BHK category]Consumers preference by budget in line with market level

l The adjoining graphs show the dominantbudget segments in which consumers aresearching for 3BHK and 2BHK categoriesin the locality.

l These graphs outline the budget rangeswhich consumers associate with thislocality for each BHK category

l Except for a small 6% share of consumerpreference in Rs 90 Lakh to Rs 1 Croresegment, 65% of consumer preferencewas in the Rs 1-1.7 Crore budget range

l Similarly, 68% of those consumers whowere looking for the 2BHK configurationare doing so in the budget segment of Rs 60 Lakh to Rs 1 Crore in the locality

3BHK 2 BHK


[SUPPLY ANALYSIS][Distribution of property listings by budget segment]Budget wise distribution of supply reflects the development pattern of the city

l A comparision of supply and consumerpreference by budget shows that withexception of very high budget segments,supply and consumer preference are

evenly spread across most budget ranges.This point to a market which addressesrequirement across all economic strata ofthe society

l The supply in lower budget segments is inthe peripheral areas to north and north-east of Mumbai and Thane, respectively.And, outer localities of Navi Mumbai

[Distribution of property listing by BHK category]Larger formats being pushed into the market

l The distribution of 1BHK, 2BHK and 3BHKformats in the market reflects the budgetdistribution of available listings

l The format of 51% listings in Rs 1 Croreand above budget is likely to be is 2BHKor 3BHK. Of which, 2BHK would be thedominant format type

l However, the percentage share of 1BHK inthe supply (28%) is on lower side ascompared with percentage share ofconsumer preference (45%)

l So, the market is likely pushing largerformat options which will push up theacquisition cost of an option and take itout consumer’s affordability range

Most localities arewitnessing infusion oflarge format optionsin new developments.Both the size and thecapital value ensurethat acquisition costare in the top budgetbracket for a locality


[Key parameters – 2 BHK category]Format of 2BHK caters to demand for affordable ‘large’ formats

l The 2BHK segment represents thecategory which addresses requirement foraffordable solutions with larger formats

l This affordable solution could be in termsof keeping the overall acquisition cost low

or to be in the affordable range for a locality with high capital values

l The preference for 2BHK is spread acrossbudgets. The dominant budget range isRs 60-80 Lakh with 19% share, followed

by the Rs 1-1.4 Crore range with 17%consumer preference share

l The Rs 40-60 Lakh and Rs 80 Lakh to Rs 1 Crore segments each have 11% ofconsumer preference share

l The dominant built-up area (sq.ft) in3BHK category is 1,400 – 1,600 sq.ft.Overall, the larger a built up areas rangefrom 1,400 – 1,800 sq.ft has 68% share ofactive listings

l About 24% of listings are in smaller 1,200 – 1,400 sq.ft range

l With Rs 5 Crore and above being the mostdominant budget range, one can deduce

that 3BHK options represent the premiumoption in each locality

l 41% preference in 3BHK category is in Rs 1.2 Crore and above budget segments

[Key parameter - 3BHK category]Many options available in 3BHK format


l Recent project launches from big developers have resulted inescalation of prices by 3% in Mulund West, the highest across thecity. Proposed coastal road project that would connect Malad andNariman Point, is pushing up the prices in Malad West as investorshave started taking interest here

l Chembur saw a drop of 6 % in capital values owing to increasingcongestion and crime rate in some of the pockets. With builders defaulting, several re-development projects have been hit

l Once most preferred, Mira Road saw a 2% drop in capital values. Asthe pressure over existing infrastructure is rising, civic problems suchas parking issues, traffic jams have also become evident, pushingbuyers towards Ghodbunder Road and Mulund

LISTED PRICE MONITOR

Locality Average Rental Average Capital Gross Value (Rs/sqft/mth) Value (Rs/sqft) Yield

Kharghar 13.00 7840 1.99%Mira Road 14.75 7260 2.44%Chembur 38.00 16840 2.71%Kamothe 10.25 6320 1.95%Andheri West 47.50 21020 2.71%Mulund West 31.25 13895 2.70%Malad West 36.50 15430 2.84%Kandivali East 29.50 13605 2.60%Goregaon East 36.50 16365 2.68%Goregaon West 39.25 16285 2.89%

Y I E L D M E T E R

RENT MONITOR

l Values remained unchanged in Andheri West, one of the mostpopular localities for rent. Whereas affordable hubs of Kandivali Eastand Mira Road saw a 3% drop in rental values. With heavy rains,reach to these areas becomes tough due to water logged railwaytracks and jam-packed buses

l Goregaon East and West saw marginal drop in values. Since majorityof the supply remained for larger units of 3 and 4BHK, less preferredcategory among rent seekers

l Kharghar and Kamothe also witnessed 2% price drop. Some sectorsof Kharghar are still not ready to live in while Kamothe’s realty isawaiting project deliveries, which will bring more options for homeseekers. Connectivity is another issue which needs to be addressed

2%

l The average rental yield across the tracked localities in the citywitnessed a very marginal increase from 2.51% in 2014 to 2.55%in 2015. The yield for each locality grew by only 1.4% over theprevious year

l The city’s Yield Meter shows the relative rental returns onresidential property across the previous three years (2013-2015).

Yield is the percentage calculated between capital and annualrental values at a given point of time. If a consumer purchases ahouse for a certain value X and receives an annual rental return ofY on that property, then the ratio of Y to X classifies the yield forthe concerned property. For the purpose of given calculations, themaintenance and other costs are not factored

3.00%

2.50%

2.00%

1.50%

1.00%

0.50%

0.00Khargar Mira Chembur Kamothe Andheri Mulund Malad Kandivali Goregaon Goregaon

Road West West West East East West

2015 2014 2013


Capital Values – Locality WiseAverage Listed Residential Apartment Prices

Airoli 9040 to 11170

Andheri East 14740 to 18450

Andheri West 18950 to 24740

Badlapur 3120 to 3770

Balkum Village 8060 to 9660

Bandra West 38930 to 51070

Bhandup West 13160 to 16810

Bhayandar East 6780 to 8260

Borivali East 12880 to 16290

Borivali West 14620 to 18490

Chandivali 16950 to 20150

Chembur 15060 to 20050

Dahisar East 9060 to 11720

Dombivli 5010 to 6150

Dombivli East 5130 to 6690

Ghansoli 8570 to 10580

Ghatkopar West 17430 to 21280

Ghodbunder Road 8210 to 10230

Gokuldham 15710 to 19680

Goregaon East 14700 to 19360

Goregaon West 14710 to 19130

Hiranandani Estate 12090 to 15730

Hiranandani Garden 28860 to 38400

Hiranandani Meadows 10440 to 12660

Juhu 31570 to 42940

Kalyan 4980 to 6420

Kalyan West 5210 to 6680

Kamothe 5970 to 6950

Kandivali East 12270 to 16010

Kandivali West 13530 to 17490

Kanjurmarg East 10440 to 13360

Karanjade 4380 to 5070

Kasarvadavali 7590 to 9160

Khar West 36180 to 46960

Kharghar 7160 to 9070

Kolshet Road 8560 to 10640

Koper Khairane 9120 to 11410

Lokhandwala Complex 21250 to 27700

Lower Parel 29930 to 38870

Mahalakshmi 35810 to 44340

Majiwada 10590 to 13050

Malad East 13010 to 16400

Malad West 13970 to 18050

Manpada 9880 to 12040

Mira Bhayandar Road 6290 to 8010

Mira Road 7010 to 8720

Mulund East 13310 to 17080

Mulund West 12650 to 16140

Nallasopara 3920 to 4880

Nerul 10720 to 13880

New Panvel 3780 to 5040

Panvel 5000 to 6490

Parel 21620 to 28690

Pokhran Road 11030 to 13520

Powai 17940 to 22340

Prabhadevi 35500 to 45590

Road Pali 5720 to 6710

Sanpada 11580 to 15040

Santacruz West 32620 to 43070

Seawoods 9710 to 12600

Shilphata 4561.1 to 5457

Taloja 4060 to 5030

Thakur Complex 14080 to 16840

Thane West 9530 to 12420

Ulwe 5110 to 6230

Vasai East 4220 to 5220

Vasant Vihar 11480 to 14050

Vashi 10750 to 14390

Vile Parle East 25390 to 33740

Virar 4030 to 4950

Wadala 19820 to 24320

Worli 34550 to 44010

Locality Capital Values (Rs/Sq feet)

Locality Capital Values (Rs/Sq feet)

MUMBAI

VOL5, ISSUE 1; APR-JUN, FY 2015-16propindex.magicbricks.com

D I S C L A I M E R

Every effort has been made to make this Index as complete and as accurate as possible. MagicBricks accepts no responsibility for inaccuracies inthe information/data contained in this book. It shall have neither liability nor responsibility to any person or entity with respect to any loss ordamage caused, or alleged to have been caused, directly or indirectly, by the information contained in this book. The information/data in this

book is subject to change from time to time due to market condition.

CONTACT USl Post your feedback to -

propindex @timesgroup.com

l Join our discussion forum at -openhouse.magicbricks.com

l For business enquiries - [email protected]

l You may also share your opinion with #PropIndex onour Twitter handle @magicbricks or connect with us onFacebook at www.facebook.com/magicbricksTOI

PROPINDEX TEAM

l Content & Research: E Jayashree Kurup, Dipti Tandon, Subodh Kumar, Rohit Vats, Bhawna Mongia, Namrata Ekka, Preeti Sharma, Renu Arya, Aradhana Mozumdar,Sneha Mammen, Pushpa Rawat, Surbhi Gupta,Puneet Kukreja & Bikash Kumar

l Layout Design:Harsha Khattar

forewordproperty.magicbricks.com/microsite/buy/propindex/images... · 2018-04-22 · property index...

Documents