Listed developers in Mumbai will not launch new homes over the next two-three quarters, as these firms are planning to focus on completion of projects and shifting business models to become RERA compliant, said a December 28 research report by Kotak Institutional Equities. While organised developers from Mumbai recorded steady sales till recently, the market has slowed after growing for two years on volumes, said a Kotak report.
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“Mumbai, which outperformed other metros with volume growth in FY 2015 and FY 2016, has also seen a drop in sales since April 2016. 1HFY17 (first half of FY17) sales are down nearly 30 per cent year on year. Market share gains from large developers in Mumbai have been the most among metros. Launches too have dropped, but more on approval issues. High Court order on waste management and National Green Tribunal issues resulted in lesser approvals in the past nine months. Further, approval costs in Mumbai are high, which have resulted in smaller developers delaying plans (for lack of funds),” said the report.
The report said most of the organised developers want to finalise plans before launching projects unlike before where plans changed multiple times even after the launch to better utilise the FSI.
“While some corporates (into real estate) are willing to let go of some FSI, traditional developers are likely to delay plans for higher FSI utilisations. Cost considerations and project budgets also play a role in planning projects. Costs and means of finance, construction timelines and proposed RERA rules are important considerations before developers’ undertake projects,” said the Kotak report.
According to Ashwinder Raj Singh, Chief Executive Officer of Residential Services at JLL India, Mumbai will continue to be one of the top top five hotspots for residential property investment in the country in 2017 followed by Bengaluru, Hyderabad, Ahmedabad and Chennai.
“Not only are these cities attracting new businesses and industry, their respective governments are also investing resources in building adequate infrastructure to attract capital,” said Singh.