Demand within the Mumbai Metropolitan Region dropped by a whopping 25% in H1 2014 in comparison with the same period last year, according to Knight Frank Research.

While, buyers continued to sit on the fence for the most part of H1 2014 in anticipation that the new and stable leadership at the Centre would revive the ailing economy.

The QTS ratio for the MMR has more than doubled in the last ten quarters, from being 5 in December 2011 to 12 in June 2014, implying that the unsold inventory will take almost three years to sell.

Four important transit infrastructure projects have come up within the Mumbai city limits, which may redefine the property market dynamics of the entire metropolitan region.

Although 2014 would witness a decline of 15% in new launches to 92,845 housing units, it would be a trend reversal year for absorption, which will increase by 8% to 80,022 units.

The absorption of office space, at 2.5 million sq. ft. declined by 34% in H1 2014 over H1 2013 owing to the general elections which resulted in corporates adopting a noncommittal attitude towards taking up office space during the first half.

With developers deferring fresh launches to adjust to the changed market conditions, new project completions dropped by 25% in H1 2014 in comparison with the same period last year.

In comparison with H1 2013, when the market vacancy stood at 22.3%, the vacancy in H1 2014 increased marginally. The manufacturing sector has emerged as the largest demand driver, with a contribution of 48% in H1 2014, leaving behind the BFSI and IT/ITeS sectors at 15% and 12% respectively.

Samantak Das, chief economist & director- Research, Knight Frank India said, 'Over the last 2-3 years, India's economic health had deteriorated, and the situation of the Mumbai Metropolitan Region (MMR) residential property market was no different. The shrinking size in terms of demand and supply confirms the misfortune of the region's residential market. However, with a new, stable government at the centre, stakeholder sentiment has witnessed a remarkable improvement. The first budget under the leadership of Narendra Modi offered several positive surprises to the realty sector, with special focus on housing that will benefit the Mumbai realty market, with peripheral areas being the biggest beneficiaries.'

'As for the office market, government initiatives for improving business sentiments, along with impetus on real estate FDI and REITs, will bode well for the country's financial capital. This is expected to revive the absorption in office space over the next six months.'