The real estate market in Mumbai is slowing down.

 The real estate market in Mumbai is slowing down.

Strong home sales and record registrations have occurred, but the ecosystem is indicating that the figures may be inflated.

A record 1.22 lakh sales registrations are anticipated in 2022, which is nearly 70% more than the levels witnessed from 2016 to 2019.

As a Mumbai real estate tracker, the past six to eight months have been uncommon. The ecosystem as a whole is selling the narrative that "everything is good."

But in recent months, I've discovered that I'm coping with the ecosystem's exact opposite problem. Record registrations have accompanied high home sales, but the ecosystem is indicating that the figures may be inflated. A record 1.22 lakh sales registrations are anticipated in 2022, which is nearly 70% more than the levels witnessed from 2016 to 2019.

Nobody in my circuit seems to be experiencing this bonanza in 2022, so who is actually generating those sales numbers? asked an intermediate developer.

On one level, the standard reaction to this is that sales in the secondary market outpace registrations. Two-thirds of all sales have historically come from one market. As a result, even though many builders have inventory that is still being built,


The resale market is driving the action.

This is a good argument, but it is put to the test when a different stakeholder notes the distinction between banks and NBFCs. These lenders are critical players in the secondary market as well. A powerful lender questioned me, "Which lender is serving these home purchasers in the last 6–9 months as they are not coming to me."

In reality, there is no answer. This is so because these sales do not involve "registration." These are free homes provided to the structures' current owners. Free Home: Why? because historic structures are being renovated in great numbers in Mumbai. Old buildings with 4 or 5 storeys are expected to be replaced by new structures with 12 to 18 storeys thanks to rising FSI at a reasonable cost.

It is stated that the new structure will have larger and newer flats for the residents of these older buildings. The "Permanent Alternative Housing Agreement," or PAAA, between the developers and the owners in this case. Ideally, these agreements shouldn't be classified as "sales," but the mandarins in government haven't yet established that line of separation.

What matters is how much these PAAAs will contribute to the 1.22 lakh sales agreements in 2022. At least 23,629 sales agreements were genuinely PAAAs in 2022, according to real estate data platform Zapkey, more than a five-fold increase from 2018 to 2020.

The actual figure may be greater, according to Sandeep Reddy of Jaapki, since we base a portion of our coverage on survey data and gather registered transactions from government agencies based on communities.

In other words, PAAAs make up at least 20% of all sales agreements. What level is PAAA?

Although exact figures are difficult to determine, an educated guess is achievable. Under the authority of MHADA, BMC, and SRA, 3,563 projects are undergoing rehabilitation at the moment. Typically, most structures contain 15 to 20 units before being put up for rehabilitation. Let's assume there are 17 units on average for the purposes of calculation.

A PAAA was had to be signed by each of these apartment owners before the building was torn down. Over 60,000 PAAA are represented by 3,563 structures with an average of 17 units. To solely assign these PAAAs to 2022 would be incorrect. The 2021 FSI exemption sped up development and raised PAAA in the final three months of that year. According to Zapecki, there will be at least 10,338 PAAAs in 2021.

According to what I understand, after making these changes, the PAAA for 2022 would be at least about 45,000, which would indicate that the year's real sales were around 77,000 units. These volumes resemble those observed before to Covid.