Purchasing a home is a monumental decision, especially if you’re looking at the mid-segment or luxury end. With metropolitans like Mumbai & Pune becoming hotbeds for high-end homes, it is clear that today’s homebuyers are leaning towards luxury & comfort clubbed under one roof. But how is the real estate market coping with the rising demand for luxury housing in MMR and Pune? 99acres finds out.
In the wake of the pandemic, the luxury real estate market has witnessed a remarkable comeback over the past few years. The work-from-home trend prompted a surge in luxury home investments, featuring spacious layouts, top-tier amenities, and enhanced quality of life. Needless to say, prime locations like the Mumbai Metropolitan Region (MMR) and Pune have been at the centre of the trend, witnessing eight percent and 42 percent growth, respectively, in Q3 (Jul-Sep) of 2023. 99acres traces the reasons behind the growth in the mid-income and luxury housing in MMR and Pune, and how the market is expected to unfold in 2024.
What propelled the demand in the mid-income and luxury housing market in MMR and Pune?
The surge in luxury housing sales in Mumbai can be attributed to the Union Budget of 2023, where the Government set a limit of Rs 10 crore for tax deductions on long-term capital gains. Currently, any appreciation in property prices is taxed at 20 percent after indexation unless the gains are reinvested within two years. The new capping, effective from April 1, 2024, will revise the tax-exemption limit to Rs 10 crore under Sections 54 and 54F of the Income Tax Act. Experts believe this development in luxury housing demand in most cities, particularly in Pune and Mumbai, is due to the rush to save taxes on capital gains and the desire to upgrade to better and spacious homes.
How have the prices for mid-segment and luxury housing changed in Pune and MMR?
While home values in Mumbai have always been on the higher end compared to its counterparts like Delhi, Bangalore and Hyderabad, the post-COVID era has further spiralled the rates up. Developers attribute the reason to the higher cost of construction raw materials, increased mortgage rates, and spacious homes being the priority. Moreover, multiple NRI investment opportunities flooding in from the Gulf countries are also one of the major reasons why metropolises like Mumbai and Pune are facing high luxury home demands.
Another reason for the rampant rise in luxury homes is the surprising salary hikes in the post-pandemic years. As per ET HR World, Mumbai saw an 18 percent hike in salary after the pandemic. This is higher than the average 11 percent hike in the rest of the metro cities. This is also one of the reasons why Knight Frank’s 2023 Affordability Index report ranked Mumbai first in the list of the most expensive cities in India. The report also stated that the EMI-to-income ratio of 55 percent indicated that Mumbai residents dedicate more than half of their salaries to home loan EMIs.
However, despite the rising costs, residential sales remained resolute throughout 2023, with the MMR region recording sales of 1,53,870 units as opposed to 1,09,730 units in 2022. Following close was Pune, with 86,680 units sold as opposed to 57,145 units in 2022.
Luxury housing trend in the MMR region and the revenues earned
Let’s understand the emerging luxury housing trend with the help of Maharashtra State government’s revenue collection from property transactions. Maharashtra State government bagged Rs 6,500 crore across 72,700 property registrations in the January-July 2023 timeline.
