Mumbai Land Values Continue to Rise
Mumbai is one city in India that is most affected by recession and bad economic condition. There is a huge inventory pile up in the city that will take at least 48 months (or 4 years) to clear, and it continues to pile up. Yet interestingly, the land values in Mumbai continue to grow. There are several reasons for this continuous growth of land value.
Mumbai land values on the rise
With a slow economy, property sales in many Tier I cities are affected. Mumbai is one of the worst hit cities. The financial capital has the highest unsold inventory among the Tier I cities across the country. With rising inventory in the city, one would expect a price correction across the Mumbai real estate market. Yet, one can see that there is almost no price correction in most of the micro-markets. While there seems to be a fall in property values in some of the areas, the fall is negligible. In fact, the property values in many areas are either stagnant or on the rise. The residential land values have gone up by almost 35 per cent in the last two years.
Reasons for rising land value
The primary reason for this growing land value in Mumbai is the limited availability of land parcel for construction. Mumbai’s land mass is hardly about 500 sq. km and its buildable area is just 200 sq. km, which means that the entire population must live in less than half of Mumbai’s land mass. In addition, there is the ever-growing population of Mumbai. This makes the city very densely populated. In certain areas, the population density is about 40,000 people per sq. km.
Mumbai has an annual demand of about 2 lakh homes with a total requirement of about 2.1 million homes in the city. With new projects being built everyday across the city, the available land parcel for construction is only reducing. However, the available homes for buyers is barely about 25,000 per year, which is not necessarily in the middle-class segment. This means that, there is still a huge supply-demand gap, which further fuels the demand and hence, land values.
Another problem that affects the land value in Mumbai is that, unlike certain cities such as Chandigarh, Ahmedabad or Surat, Mumbai land utility hasn’t really been planned. It also suffers from unplanned infrastructure. This further aggravates the shortage of available land for construction. Then, there are changes in development norms that have created regulatory constraints and have contributed to the increasing land values.
If Mumbai expects to fight the rising land values and property prices, then a proper plan to decongest the city as well as improve the infrastructure across the city is the need of the hour.
