Is Buying a flat in Mumbai still worth it?

Mumbai real estate has seen a spike that isn’t explainable in words. Being the financial capital

of India and the preferred location to place the headquarters of majority corporate giants, this

city has been one of the top performers in the real estate industry. With nearly 4000 cities

bifurcated in India, buying a flat in Mumbai remains a dream for many homebuyers.

Let us deep dive into the parameters that make or break the potential of Mumbai real estate

being the “smart investment”.

To begin with the advantages, Mumbai city hosts the maximum number of commercial and

financial hubs. Corporates ranging from MNCs to MSMEs, majorly secondary and tertiary

sectors, hail Mumbai to be the amalgamation of work-life-equilibrium. The main reason would

be the urbanization and the facilities the city offers.

1.      ROI – The return on Investment in Mumbai real estate has seen a consistent spike over the years. In fact, when the entire world was financially struggling to re-enter the market, real estate per says jumped back faster and how! With the newfound positive sentiment towards “owning a house” acted as a catalyst for this trend. Coming to Mumbai as a geography, in the last year itself it witnessed an average return of 4.05% which is a 15 percent increase from 2019.

2.      Infrastructural support – Mumbai, as a tier I city, has witnessed a substantial growth in terms of both civil and social infrastructure. Rail – Road – Air – Mumbai serves as the capital junction for the three most utilized modes of mobility is stationed here. Accommodating a strong history of local railways, and fast paced metro-line development and other local modes only elevates the convenience of movement here.

3.      Migration – Mumbai is not only perceived as a financial capital but is also an entertainment capital. With the base of Bollywood and television industry located here, the city accommodates not only corporate migration but a substantial number of hustlers moving from tier II & III cities. Post covid, and with the sentiment, Mumbai witnessed a substantial migration of working population that spiked both commercial and residential demand.

4.      Rental yield – At any point, the average rental yield is around 2 to 3%, higher than the national average. Plus, the demand-supply dynamics fit better due to the migrating population and rampant commercial hubs being built.

5.      Diversity – Mumbai is basically a “Multi Cuisine Restaurant” of the real estate market. The variety in terms of size of society (standalone, megaprojects, townships etc.), or the configurations (1, 2, 3, 4BHKs, penthouses, bungalows etc.), or the price ranges (affordable, mid-segment, luxury, ultra luxury) – basically a palette of choices at part with the variety of population.

Mumbai is not only an end-user’ market, but a fair field for investors. The dynamic nature of the city makes the play of investment risky yet very attractive.

However, over the past few quarters, there is a growing school of theory that feels Mumbai has become a saturated spot for real estate. Although the benefits still surpass the disadvantages, there are a few “red flags” that need attention –

1.      Rising property prices – Owing to the scarcity of land as against the rising population, the demand is stiffening, and supply is soaring in terms of pricing. Furthermore, the cost is variant as per the locality and infrastructure.

2.      Market volatility – Mumbai is undergoing a never-ending revamp in terms of infrastructure, economic conditions that has an evident impact on its real estate. This kind of capriciousness can trigger the Mumbai real estate to a higher price edge.

3.      Regulatory changes – MAHARERA is one of the strongest embodied establishments under RERA. The stringent nature and ever-changing regulations impact the valuation and further the ROI too.

Mumbai serves as the iconic real estate market – suited for the risk takers. Mumbai real estate is as active paced and agile like the city otherwise.