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Mumbai’s real estate market continues to flourish, making it an opportune time to transition from renting to buying.
Mumbai’s luxury housing segment saw a record-breaking Rs 12,300 crore in sales in the first half of 2024.
Authored By Nikunj Sanghavi:
Owning a home in Mumbai symbolises financial security and cultural pride. Beyond being a valuable asset, real estate here is an enduring legacy, often passed down through generations. According to the latest market data, Mumbai’s luxury housing segment saw a record-breaking Rs 12,300 crore in sales in the first half of 2024, reflecting an 8 per cent growth compared to the same period in 2023. This data underscores the city’s robust real estate market, where properties in prime localities continue to appreciate significantly.
For a 2-BHK apartment in Mumbai’s prime localities, the average monthly rent is approximately Rs 60,500. Over five years, this rental expense totals about Rs 36.3 lakh, with no equity gained. Conversely, purchasing a 2 BHK in suburban areas like Goregaon East, where property prices average Rs 2.5 crore, involves a 20 per cent down payment of Rs 50 lakh and monthly EMIs of around Rs 1.5 lakh (assuming a 20-year loan at a 9 per cent interest rate). While the upfront and EMI costs are significantly higher, buying offers long-term financial security, equity growth, and potential tax benefits, making it a more prudent choice for those planning to stay long-term.
Why Buying Trumps Renting in Mumbai?
One of the most compelling reasons to buy a home in Mumbai is the ability to build equity over time. Unlike rent, which is a recurring expense offering no long-term returns, every EMI paid goes toward owning a tangible asset. This not only builds financial security but also provides stability. Additionally, properties in key localities such as Worli and Goregaon East have shown remarkable appreciation rates.
Goregaon East recorded an astounding 1,444 per cent increase in luxury home sales value, driven by high-demand projects. This potential for asset growth adds another layer of financial prudence to homeownership, especially in a city where property values consistently rise. While rental payments are subject to inflationary hikes, EMIs remain relatively stable, enabling better financial planning.
Beyond equity and appreciation, the Indian government offers significant tax benefits to homeowners, further tipping the scale in favour of buying. Under Sections 80C and 24(b) of the Income Tax Act, homebuyers can claim deductions on both the principal and interest portions of their EMIs. These tax incentives effectively reduce the annual financial burden of homeownership.
For first-time homebuyers, the Pradhan Mantri Awas Yojana (PMAY) scheme provides additional financial relief. Eligible buyers can access interest subsidies of up to 6.5 per cent on home loans, significantly reducing monthly EMI outflows.
Emerging Trends in Mumbai’s Real Estate
Mumbai’s luxury real estate market continues to thrive. With an increasing number of HNIs and startup founders investing in Mumbai, the city recorded its highest-ever sales of luxury homes above Rs 10 crore. Additionally, Suburban locations like Goregaon East and Prabhadevi are emerging as luxury housing hotspots.
These areas combine affordability with excellent infrastructure, making them ideal for first-time buyers seeking long-term value. In Mumbai, more and more buyers are showing a growing preference for spacious apartments ranging from 2,000 to 4,000 sqft. This trend reflects an emphasis on comfort and lifestyle upgrades.
Financing Options for Aspiring Homeowners
Purchasing property in Mumbai is undoubtedly a significant financial commitment, but accessible financing options have made this journey easier. Financial institutions now offer customized loan packages with competitive interest rates and flexible repayment terms. Opting for properties in suburban localities can reduce the financial burden while offering the potential for substantial future appreciation.
While renting offers flexibility and lower upfront costs, it lacks the enduring benefits of property ownership. Owning a home in Mumbai not only secures a valuable asset but also aligns with the city’s long-term real estate growth trajectory.
Bottom Line
For those prioritising stability, equity growth, and financial foresight, buying a home in Mumbai represents a prudent investment. With rising property values, enhanced technology integrations, and government incentives, owning a home in the city is not just a lifestyle choice but a strategic financial move. As the data suggests, Mumbai’s real estate market continues to flourish, making it an opportune time to transition from renting to buying. Whether you aspire to invest in a luxury residence or a modest suburban home, Mumbai offers options tailored to diverse needs, promising security, growth, and legacy.
(The author is managing director of Veena Developers)
