Even if real estate prices are rising, the bull market for luxury homes in India is still going strong. Mumbai, India’s most expensive city, saw revenue from property registrations reach a new high in February 2023 at Rs 1,102 cr, according to the Inspector General of Registration (IGR), Maharashtra. This represented a staggering increase in Mumbai property revenue up 79% over February 2022 collections, which were Rs 615 cr.
The total number of real estate registrations decreased by 8% over the course of the year, from 10,379 total registrants in February 2022 to just under 9,511 registrations in February 2023, despite a large increase in revenue receipts in Mumbai during the period.
This demonstrates unequivocally that there was significant movement in the selling of expensive properties or luxury residences.
If we dig deeper into the data, February 2023 will see Mumbai’s most extensive monthly income collection in the previous five years. Moreover, February recorded the highest revenue collections throughout the entire FY 2023.
The government’s recent decision in the Union Budget 2023–24 to cap capital gains at Rs. 10 crores could be a significant cause for the increased sales of expensive residences in Mumbai and other top cities.
Beginning in April 2023, this new action will take effect. Thus, HNIs in prominent cities like Mumbai are hurrying to finalize luxury housing acquisitions before the fiscal year closes in March in order to minimize tax on capital gains.
According to the new law, the maximum benefit that may be obtained when buying property in Mumbai is only up to INR 10 crore if one sells a house or other assets, such as stocks, for more than Rs 10 crore. From April 2023 forward, capital gains over Rs 10 crore would be subject to taxation.
HNIs and ultra-HNIs used to frequently reinvest their capital gains tax savings into ultra-luxury real estate. Hence, once the new rule is in place, it might serve as a slight impediment to the sale of luxury homes. It remains to be seen, though, whether or not it will significantly affect this market area.
Following the pandemic, the luxury home market has done extremely well, with overall sales climbing sharply across the top seven cities. Much better results have been seen in the year 2022. According to Anarock Research, 18.5% (or around 65,680 units) of the 3.65 lakh units sold in the top 7 cities in 2022 were in the luxury sector and cost more than Rs 1.5 crore.
In contrast, only 7% (or about 17,740 units) of the 2.61 lakh total units sold in 2019 fell into the luxury category. With around 50,100 total sales in these three cities combined, MMR, NCR, and Hyderabad have led luxury property sales in 2022. Nevertheless, they only managed to sell 14,050 luxury residences in total in 2019.
The improvement in property revenue in Mumbai is encouraging news for the real estate market, which was severely impacted by the pandemic. It shows there is still a high demand for real estate property in Maharashtra and that the government’s initiatives to assist the industry are having a good impact.
Although it is unclear how the Mumbai real estate market like 2 BHK flats in Mumbai will change over the next few months, the current pattern of rising property values and income is anticipated to last.