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Mumbai Drives Bull Run in Luxury Housing

Torbit - March 04, 2023 - - 0 |

The bull run in Indian luxury housing continues even while property prices are on the rise, with Mumbai emerging as the biggest driver. Luxury home sales in Mumbai have boosted revenue in February 2023 to Rs 1102 crore, registering a rise of up to 79 percent in a year.In terms of overall sales share,  

Interestingly, even while revenue collections went up significantly in the period in Mumbai, the total number of property registrations saw a drop of 8% in the year – from 10,379 total registrations in February 2022 to nearly 9,511 registrations in February 2023. This, according to Anuj Puri, Chairman, Anarock Group, clearly indicates that the sale of big-ticket price homes (i.e. luxury homes) saw significant movement.”

If we deep-dive into the data further, February 2023 has seen the highest revenue collection in Mumbai in the last five years during the same month. Also, in the entire FY 2023,  February has recorded the maximum revenue collections.

One major factor for high sales of big-ticket price homes in Mumbai and other top cities could be the government’s recent move in the Union Budget 2023-24 to cap capital gains at INR 10 Cr. This new move will come into effect from April 2023. Thus, to save tax on capital gains, the HNIs across top cities including Mumbai are rushing in to close luxury housing deals before the financial year ends in March.

Under this new move, if one sells a house/other assets including equities and his/her gains are more than INR 10 crore, then the maximum benefit that can be availed is only up to INR 10 crore when invested into another property. Capital gains of over INR 10 Cr will henceforth be taxed from April 2023.

Previously, to save on tax from their capital gains, HNIs/ultra-HNIs would mostly re-invest into an ultra-luxury property. Thus, the new move could be a deterrent for luxury housing sales to an extent once the new provision comes into effect. However, to say that it will have a major impact on this segment will remain to be seen.

The luxury housing segment has performed remarkably well post the pandemic, with overall sales rising steeply across the top 7 cities. The year 2022 has been even better. As per Anarock Research, out of the total 3.65 lakh units sold across the top 7 cities in 2022, about 18% (approximately 65,680 units) were in the luxury category priced above  Rs 1.5 crore. Contrastingly, of the total 2.61 lakh units sold in entire 2019, just 7% (approximately 17,740 units) were in the luxury category.

MMR, NCR, and Hyderabad have led luxury homes sales in 2022 with approximately  50,100 units sold in these three cities altogether. Back in 2019, together they saw sales of mere 14,050 luxury homes in the entire year.

  • Data further reveals that in terms of overall sales share, MMR’s luxury housing sales share increased from 13% (of 80,870 units) in 2019 to nearly 30% (of approx. 1.10 lakh units) in 2022.
  • In NCR, the sales share rose to 15% (of approx. 63,710 units) in 2022, from 4% (of the total of 46,920 units sold) in 2019.
  • In Hyderabad, it increased to 16% (of the total of 47,490 units sold) in 2022 from 10% of 16,590 units sold in 2019.
Luxury Housing Sales Share across Top 7 Cities
Year 2019 2020 2021 2022
Total Unit Sales across all budget categories 2,61,360 1,38,350 2,36,520 3,64,870
% Sales Share of Luxury Homes (>INR 1.5 Cr.) 7% 6% 9% 18%

 

Source: ANAROCK Research

Going forward, the February 2023 sales statistics, especially in Mumbai, point to a promising scenario for luxury housing, though the new provision in the Union Budget of FY 24 regarding capital gains tax may have some negative impact.

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