High Net-Worth Individuals Cashing Out of Mumbai Real Estate Market
Mumbai’s real estate market has seen a notable shift in recent months, as high-net-worth individuals (HNIs), including several Bollywood celebrities, have begun selling off their properties. This trend, observed particularly in January 2025, has raised eyebrows among investors and tax experts alike, who are keen to understand the motives behind such moves. While property investments are generally viewed as a stable, long-term asset, factors like tax strategies, stock market volatility, and the boom in property prices seem to be influencing the decision of many HNIs to liquidate their real estate holdings.
The most prominent reason, according to tax experts, is the opportunity to capitalise on the current price appreciation of properties in Mumbai. With the market showing substantial growth, especially in premium residential sectors, many investors have seen significant returns on their property investments. These gains have created an opportune moment for HNIs to book profits, particularly when they can set off long-term capital gains (LTCG) from property sales against recent losses in the stock market. Vivek Jalan, a partner at Tax Connect Advisory, explains that the recent slump in the stock market has led to a scenario where many investors, having suffered long-term losses, are choosing to offset those losses with profits from property sales. This move is seen as a strategic tax-saving measure, where an investor can potentially save up to 12.5% in taxes.
Tax changes in the 2024-25 Budget have further heightened the incentive for HNIs to sell. Finance Minister Nirmala Sitharaman proposed lowering the LTCG tax rate on real estate to 12.5% from 20%, though without the indexation benefit. While the government later amended this provision to allow investors to choose between a lower rate of 12.5% without indexation or the higher 20% rate with indexation for properties acquired before July 2024, it has still created a sense of urgency among HNIs to capitalise on the existing market conditions. The recent changes to tax rates have further encouraged many to make a move before the government potentially alters the tax structure again.
The impact of these tax strategies is not lost on real estate consultants either. Jayesh Rathod, co-founder of The Guardians Real Estate Advisory, believes that the ongoing sales trend can be attributed to both the appreciation of property values and the negative sentiment in the stock market. As stock market returns have diminished in recent months, HNIs are using real estate as a profitable avenue to balance their portfolios. With both commercial and residential properties in Mumbai experiencing healthy capital appreciation, investors are capitalising on these gains while making use of tax-saving strategies.
From a broader perspective, this trend highlights an interesting dynamic in Mumbai’s real estate sector. HNIs are not just reacting to market conditions but are also employing advanced tax strategies that reflect a growing understanding of how real estate can be used to offset other financial setbacks. Moreover, this trend could have wider implications on Mumbai’s real estate market, especially in terms of demand for premium properties. As these high-value transactions unfold, they underscore a growing sophistication in the investment approaches of India’s elite.
Sustainability also plays a significant role in this shifting landscape. The luxury real estate market in Mumbai, which has seen the highest price appreciation, is also increasingly focusing on sustainable and energy-efficient designs. As global investors and high-net-worth individuals place more value on eco-friendly and green buildings, it is essential for Mumbai to evolve towards sustainable urban development. In this regard, high-value sales could push developers to adopt more sustainable building practices, which not only enhance long-term property value but also contribute to a greener, more sustainable urban environment.
In conclusion, the current trend of HNIs selling their properties in Mumbai reflects a confluence of factors, including the tax implications of LTCG changes, strategic portfolio management, and the growing value of real estate investments. As property values continue to rise, these individuals are capitalising on their investments while navigating a volatile stock market. The Mumbai real estate market, particularly in premium sectors, is likely to remain a strong investment avenue, but future trends will depend heavily on tax policies and sustainability considerations.
