Mumbai Real Estate: 1BHK Owners Upgrade to 2BHKs as 2BHK Apartments Gain Popularity After Covid

After COVID-19, many prospective homeowners around the nation have thought about moving up to larger houses. Mumbai, the most expensive real estate market in the nation, is seeing the same trend. According to data, owners of 1 BHK apartments are switching to 2 BHK units, while owners of 2 BHK apartments are switching to 3 BHK units.

According to registration data from real estate regulator Maharashtra Real Estate Regulatory Authority (MahaRERA), the launch ratio of 1 BHK apartments in Mumbai has decreased slightly by 5%, while the launch ratio of 2 BHK apartments has stayed the same and the launch ratio of 3 BHK apartments has increased by approximately 5%.

According to real estate specialists, the statistics may show that purchasers of one-bedroom homes are upgrading to two-bedroom homes and that owners of two-bedroom flats are doing the same.

The number of apartment releases in the calendar years 2021 and 2022 has also increased compared to the pre-Covid-19 period in 2019, however the first half of 2023 has seen a 48 percent decrease in debuts compared to that of 2022.

The decline in the first half of 2023 has been linked by experts to a number of factors, including consolidation, strict MahaRERA registration requirements, and a decrease in sales.

Upgrade potential

Experts claim that when it comes to the launch ratio in the Mumbai real estate market, 2 BHK continues to be a popular choice.

“In 2023, the majority of new construction was concentrated in North and Central Mumbai, notably above Dadar and Sion. Malad West, Andheri East, Vikhroli, Mulund East, and Jogeshwari East are the top locations with the largest number of new releases, topping 1,000 units. According to Pune-based Rahul Ajmera, developer at Vasupujya Corporation and member of the data analysis wing at Confederation of Real Estate Developers’ Associations of India (CREDAI), the country’s top organization for real estate developers, roughly 30% of the new housing inventory is made up of 1 BHK configurations.

However, there has been an increasing desire for bigger apartment configurations of 3 BHK, whilst the launch ratio of 2 BHK has essentially kept the same, according to Ajmera, who conducted a research based on the data made available from the MahaRERA website. This may point to a trend wherein 1 BHK apartment owners are upgrading to 2 BHK homes, and 2 BHK apartment owners are upgrading to 3 BHK homes.

Spike Post Covid-19 is released

In Mumbai, around 34,000 units were introduced in the year 2019, however due to the Covid-19 shutdown, that number fell to 25,000 units in the following year. But in 2021 and 2022, the number of launches significantly increased to around 55,000 and 73,000, respectively. However, compared to around 48,000 units in the first half of 2022, only about 27,000 units were introduced in the first six months of 2023.

The percentage of new 1 bedroom units launched in 2023 decreased from 34% to 29%, while the percentage of new 2 bedrooms remained at 38% and the percentage of new 3 bedroom apartments increased from 11% to 15% from 2023 to 2019. The launch ratio measures the proportion of a certain kind of launched configuration to all launched units.

Small-player consolidation

Consolidation by minor players, according to real estate developers, is one of the causes of the decline in launches in 2023.

According to Keval Valambhia, Chief Operating Officer of CREDAI-MCHI, the apex body of real estate developers, “the new launches in Mumbai increased post Covid-19 and there were various reasons like the increased scope of getting additional floor space index (FSI) due to Development Control and Promotion Regulation 2034 since 2021, followed by a 50% waiver in premiums paid by developers to authorities.”

But the launches may have slowed down during the last year, he said. The market is oversupplied, which has made it difficult for small players—who account for around 40% of sales—to sell their products in recent months. As a result, they are merging. Another factor for the decline in registrations and launches is the justified tightening of MahaRERA registration requirements this year.

Sales slowing down?

A downturn in the primary market, however, is another factor contributing to fewer launches in Mumbai, say real estate advisors.

“The main market in Mumbai has slowed considerably during the last three months. However, compared to under-construction developments, demand and sales for ready-to-move-in flats are greater, and agreements are closing, according to Ravi Kewalramani, Director at RK Mumbai Realtors, a real estate consulting business.

Developers, he said, are optimistic but delaying launches in Mumbai and closely monitoring the market. “There is a lot of supply, and upcoming elections in the country and state will also play an important role for developers wanting to launch projects in the next one year,” he added.