Mumbai: The Mumbai real estate market is expected to see a further dip in new project launches and, perhaps, even in sale of apartments as uncertainty looms over the new development plan of the city.
Major developers are anticipating delays in launches, and it may be sometime before they are ready with plans that are in line with the new plan.
Oberoi Realty has, for example, held back the formal launch of its Borivali project, with the management saying it needs some clarifications pertaining to the new development plan.
Market analysts say Oberoi’s Borivali project was estimated to come up with 800-1,000 apartments on April 25, making it a large-sized launch. However, following Oberoi’s quarterly financial results, chairman and managing director Vikas Oberoi said the company will now wait as “it is unclear whether the IOD (intimation of disapproval) received for the Borivali project will have to be amended so we have decided to pause and postpone the launch”.
While Oberoi envisages the delay will be that of a month, brokerage analysts have expressed concerns on the project’s timeline.
Another large Mumbai-based real estate company, Godrej Properties, has held back three projects given the confusion around the new development plan. “We had to delay three important project launches owing to the new development plan in Chembur, Byculla and Vikhroli,” said Pirojsha Godrej, MD and CEO, Godrej Properties.
The state asked the MCGM, or the Municipal Corporation of Greater Mumbai, to revise the new development plan 2034 for Mumbai on April 21, after it evoked massive criticism. Among a host of other changes, the plan had increased the floor space index, which indicates permissable construction on any plot. According to experts, if height and developable limitations are re-engineered, companies will have to go back to the drawing board and reconstruct plans. It is not surprising that companies are holding back launches, said Shishir Baijal, chairman of Knight Frank India.
“As we had anticipated, the coming year will be a period of uncertainity and several project launches will be halted. Developers will struggle to lock project layouts as the new plan will have different guidelines for open space regulations, height restriction of buildings and general utilisation of space,” Baijal added.
“Mumbai had suffered a glut in launches after the DCR (development control regulation) guidelines were revised in 2012 for almost a year and a half. Developers will want to maximise on the new provisions of the development plan and will hold back launches, maybe even till the festive season, which begins in October,” said an analyst.
Maharashtra has directed MCGM to submit a re-worked plan by August, after which it will be open for furthur suggestions.
During the last one year, sales in Mumbai have fallen 20%, according to data from PropEquity. Launches in MMR (Mumbai Metropolitan Region) declined 12% whereas in suburbs like Thane and Navi Mumbai, they have fallen by more than 50%.
Ashutosh Limaye, head of research at JLL India, has a note of caution for property buyers: “Buyers should assess their needs well to decide if they should buy from the projects available now, or if they can wait until clarity emerges via the new DP,” he said.