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Momentum in Mumbai property sales picks up further

Registrations in Feb’22 best in the last decade

* Property registrations in Mumbai in Feb’22 picked up further as the average daily runrate of ~370 units was 37% higher than the average run-rate in the Apr’21-Jan’22 period and was the highest since Mar’21.

* Total registrations of 10,379 units were at a decade high and even surpassed their Feb’21 count, which was influenced by lower stamp duty. Average ticket size remained stagnant MoM and YoY at INR11.8m.

* With stamp duty rates expected to rise by 1% due to the additional metro cess starting 1 st Apr’22, we expect another strong month of sales in Mar’22 on account of prebuying.

* LODHA and OBER are our top picks among players with a material exposure to the Mumbai market.

Registrations were the highest in February of any year in the last decade

* As per the official registry, Feb’22 witnessed registrations of 10,379 apartments, which was the highest in February of any year in the last decade. It also surpassed the Feb’21 count (+2% YoY), which benefitted from lower stamp duty.

* Demand during the first fortnight of Jan’22 remained muted due to the impact of the third COVID wave and the inauspicious period before the festival of ‘Makar Sankranti’, which led to average daily registrations declining to ~150.

* It has recovered since then and Feb’22 saw average daily registrations of ~370 units, which was the highest since the end of low stamp duty period in Mar’21, indicating a pickup in the sales momentum. Average daily registrations in the Apr’21-Jan’22 period stood at 267 units.

Average ticket size largely stagnant MoM and YoY, but off from its peak

* The state exchequer collected a revenue of INR6.1b, indicating an average ticket size of INR11.8m, which is largely in line with INR11.7m/INR11.5m in Jan’22/Feb’21.

* As per the Knight Frank report, the sub-1,000sq. ft. home category continues to dominate absorption with 83% share. Feb’21 witnessed a marginal increase in the share of 1,000-2,000sq. ft. to 15% from 13% in the preceding two months.

* About 96% of the units registered had a ticket size of less than INR50m, equally split between sub-INR10m and INR10-50m. Share of units with a ticket size of INR50m units have declined to 4% from 6% between Sep’21 and Dec’21.

* Western (55%) and Central Suburbs (33%) continue to be the preferred markets, with an increasing share of absorption (84%/86%/88% in Dec’21/Jan’22/Feb’22).

Stamp duty hike from Apr’22; positive for demand in Mar’22, neutral beyond that

* The Maharashtra government will levy a 1% metro-cess (on property purchase), which was restricted until Mar’22 under the special government resolution (GR). If the GR is not extended, stamp duty rates are expected to increase to 6%.

* As a result of the slated increase in stamp duty, Mar’22 will likely see a surge in registrations due to latent demand to capitalize on lower rates.

* As developers, including LODHA, GPL, etc., continue to offer partial/full waivers in stamp duty and offset it by gradual stamp duty hikes, we do not expect any material impact of higher stamp duty charges on demand.

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