Does Mumbai have enough people to buy its expensive apartments?

Why Mumbai real estate is in a crisis? 

  • Average cost of a new apartment: INR 1.5 crore to INR 2 crore
  • Downpayment of 30% by the home buyer
  • Home loan of atleast INR 1 crore
  • EMI of approximately INR 75k

How many households can afford paying an EMI of INR 75k?

  • ~ 15,000 households pay rent between INR 50,000/month – INR 100,000 month
  • ~ 20,000 households pay rent in excess of INR 50,000/month. These households can stretch themselves and instead  purchase an apartment
  • ~ 60% of rental agreements involve a rent of less than INR 25,000/month
  • Leakages exist in rental data: Many do rental agreements for multiple years, few don’t even do agreements,  some pay a component in cash etc
  • Assuming these leakages, yet number that can afford a home will not exceed 50,000 households
  • First-home buyer demand impacting replacement and upgrade demand
  • Trend moving towards ready and resale apartment
  • Unsold primary inventory of over 100,000 units

Is it a surprise that Mumbai real estate is in a structural crisis?

NUMBER OF HOUSEHOLDS PAYING RENT ACCORDING TO DIFFERENT SLABS

Monthly Rent < 25k 25k – 50k 50k – 100k > 100k
2017 81,127 43,284 10,361 3,682
2018 1,08,256 51,706 11,935 4,254
2019 1,13,569 61,895 15,749 4,872

Source: CRE Matrix