Interest rates are the rates at which money can be borrowed for a set period of time. The higher the rate, the more money a borrower must pay in the form of interest on the loan. Reserve Bank of Indiacontrols and monitor the interest rate regime in India and sets a rate viz. Repo rate, Reverse Repo ratefor banks and other financial institutions, which in turn affects the rate at which they lend to businesses and individuals, such as people seeking a mortgage.
Generally, when the interest rate is lower, people are more likely to borrow money, as doing so will cost them less than at another time. Conversely, when the interest rate is higher, borrowing becomes more expensive and slows. This principle applies to loans that come in the form of mortgages. When interest rates are lower, people are generally more willing to take out a mortgage than when rates
In “lower-for-longer” investment environment, real estate receives increasing attention as an asset class. For investors that can cope with illiquidity, global real estate still offers the desired investment characteristics: a steady, long-term income, the potential for capital appreciation, and significant diversification benefits.
This has especially been the case in most Asian countries where structural, long-term, and sustainable economic growth has been persistent over the recent years. In fact, as GDP growth is the main driver of real estate prices and rents, real estate investments provide a direct way to participate in the strong growth of these economies.
Availability of Housing Loan
Lending supply in unrestricted manner is a major boost for the housing demand, however I observed that cumbersome paperwork inhibits home loan borrowers for purchase of houses. Most of the PSU banks are giving housing loan and their rates are quite competitive too, but still borrower prefers to avail loan from NBFC due to lesser
paper work and simplified terms and condition, for which they are charging a premium in interest rate.
After debacle of ILF&S housing demand in Mumbai has nosedived, as there is immense liquidity crunch with the NBFCs.
Affordability of House
Mumbai is ranking 7th among the top cities of the world for luxury housing demand. Houses being sold in the area of South Mumbai, which includes Napean Street, Malabar Hills, Lower Parel, Prabha Devi are in range of a million dollar to upto ten million dollar.
But the real demand comes from the suburban Mumbai, which includes areas of peninsular Mumbai areas like Powai, Andheri, Juhu, Borivali, Kandhivali and areas of NaviMumbai like Vashi, Kharghar, Sea wood has considerable demand and are quite affordable to the high income middle class hoi polloi. Price map can be seen hereunder.
Tata’s have developed very affordable homes in Boisar. However, this place is more than hundred kilometers from Mumbai South.
Mumbai has a market for housing for investment need of individual as well as companies. Mostly for the capital increase and rental income. In 2019, it is perceived that housing demand is shifting from south Mumbai to suburban areas. Normally a house with a rental income of Rs. One lakh comes at a price of Rs. 5 Crores. However after the tax deduction the effective earning for house owners are hardly 65000, which is less than 2% annually, hence the Mumbai residents are shifting their preference for houses in suburban areas where houses are in the price range of Rs1- 3 Crores and less and fetching rental income from Rs. 30000 to Rs. 1 lakh, hence giving handsome income to the house owners.
Mushrooming population and nuclear families
India has lower urbanisaton rate in comparison to other market. There is tendencies for nuclear families which is further escalating up demand for housing for their primary need.
Prompt evolution of a nuclear families and swelling population of India is significant elements of demand pull in real estate. Tier I and II cities like Bangalore, Mumbai, Lucknow, Chennai, Pune, Hyderabad and Delhi have become hubs for education and commerce. People migrate to these cities practically every day in search of better opportunities. Growing population in any place fabricates a need for living space. Further associated features such as a rise in nuclear families and divorce rates have also led to increased demand for property in cities.
Number of household in that locality
Demand for housing also demand for the number of families residing in that locality.
Lodha World Tower in Parel, Mumbai
Mahindra Lifespace Developers Ltd. (formerly Mahindra GESCO Developers Limited) is the real estate and infrastructure development arm of Mahindra & Mahindra Ltd. GESCO Corporation Limited was incorporated as a Private Limited Company on 16 March 1999 which was converted to a Public Limited Company on 18 August 1999. GESCO was originally the real estate division of Great Eastern Shipping and was spun off into an independent company in April 1999. In 2001, GESCO Corporation and Mahindra Realty & Infrastructure Developers Ltd (MRIDL) demerged the realty and infrastructure divisions of MRIDL and merged it into GESCO.In 2007, the Company name was changed from Mahindra GESCO Developers Limited to Mahindra Lifespace Developers Ltd. (MLDL)