Mumbai Rains and Floods: Real Estate Sector Sees Tough Times

Key Highlights

• Mumbai Property Prices Remain High Despite Seasonal Monsoon Slowdown.
• Heavy Rains and Waterlogging Impact Site Visits, Slowing Housing Sales in Mumbai.
• Flood-prone Areas See 10-20 percent Drop in Property Values During Mumbai's Monsoon.

Mumbai’s property prices will continue to rule higher compared with most other Indian cities, despite being the costliest in the country. But the industry, like all economic sectors, faces seasonal challenges during the monsoon months of June to September.

Much of the deceleration in this period have less to do with falling demand and more to do with site visits constrained by heavy rains, which make moving about the city difficult, if not impossible.

Daily waterlogging and flooding in strategic pockets such as Gandhi Market in Sion, Hindmata in Dadar and Milan Subway in Vile Parle makes living a nightmare for people and deters potential home buyers from making visits to the buildings for sale. The housing transfer market slows during those months, but the underlying demand is still strong.

Real estate agents note that properties in flood-affected areas of the city suffer from a fall of 10 to 20 percent in capital and rental values as compared to those in non-monsoon-affected localities. While infrastructure development like that by the Brihanmumbai Municipal Corporation (interception and improved drain system) is underway to salvage monsoon catastrophe, the reality is that the real estate market takes the hit during monsoon again and again.

The seasonal slumber can also be attributed to lower mobility in heavy rains, which impede site visits and the decision-making process of potential home buyers even as demand remains strong underneath.

"Housing sales tend to decrease during the monsoon season (July – Sept) compared to other quarters of the year. This has more to do with prospective homebuyers’ inability to go out for site visits during rains, which seriously affect mobility in Mumbai, than with an actual dip in demand," said Rajkumar Singh, Head - Residential Services (West), ANAROCK Group, a real estate consultancy.

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