67% housing demand in Mumbai from affordable segment: Knight Frank-Naredco

Supply of such housing insufficient to meet demand, says study

Mumbai Metropolitan Region (MMR) recorded a staggering 67 per cent of housing demand coming for units priced lower than Rs 25 lakh, said a report by Knight Frank and National Real Estate Development Council (Naredco).

Despite strong interest in the residential sector, the supply of affordable housing has not been able to meet this demand. According to the Knight Frank survey, the demand concentration for housing units in the Rs 25-50 lakh price range was 13 per cent and that for units priced above Rs 50 lakh was 20 per cent. 

By contrast, the supply of housing units priced above Rs 50 lakh was the highest at 44 per cent followed by Rs 25-50 lakh category, at 34 per cent. That of units priced lower than Rs 25 lakh was only 22 per cent, indicating a huge shortfall in supply for affordable housing in the region, said the report.

“Mumbai’s biggest challenge is in providing housing for its inhabitants. Unfortunately, the majority of the city' population is forced to live in either substandard housing options in the core city or live in peripheral locations,” said Shishir Baijal, Chairman and Managing Director, Knight Frank India.

Baijal added that the estimated demand over the next five years is about 850,000 housing units, which will be very difficult to meet if a proper strategy is not in place.

There is also a need to create rental housing within the city limits to accommodate the transient population between rental and ownership, and a combination of these two will provide the right response to the city’s housing challenges, he said.

Highlighting the price willingness or buying capacity of a consumer, the survey said thirty-eight per cent of the respondents would prefer to buy houses priced less than Rs 15 lakh, while 26 per cent preferred the Rs 16-25 lakh price range, and 36 per cent had a budget beyond Rs 25 lakh.
 

“As the city continues to expand across different parts and regions, we feel there is a need to create a new mission ‘Mumbai 3.0’ that would be dedicated to developing affordable townships and promoting home ownership,” said  Gautam Thacker, President, Naredco Neral-Karjat.

The current housing gap in Mumbai requires a sustainable, affordable and carbon-neutral ‘planned city’, located around the core city of Mumbai, which is backed by strong infrastructure, Thacker said.

He added that these future developments will need combined efforts between the state government, local development authorities and the development companies.

According to the findings of the report, Mumbai registers almost 20,000-50,000 residential leave and licence agreements every year. Considering an average annual number of 35,000 leave and licence agreements with an average tenure of 22 months, and adding additional consideration of non-registered agreements, the total pool of active residential tenants in Mumbai works out to almost 100,000 units. The MMR region has registered over 105,984 residential leave and licence transactions since January 2020.