Real estate supply in Mumbai´s real estate markets are heading for a slowdown. This is because of the current capital crunch that developers are facing. According to Niranjan Hiranandani, MD, Hiranandani Group of Companies, despite a backlog of 23 million houses, weak buyer sentiment and squeeze on capital is forcing developers to hold back launches.
This slowdown will not be immediately felt in the market. But two years down the line, supplies are likely to be impacted. At the Real Estate Dialogues held in Mumbai by magicbricks.com recently, the collective view is that there is a need to manage the country´s fiscal and monetary policy. Mumbai faces chaos in regulation at state and central level, according to Chandresh D Mehta, Director, Rustomjee Group. He said “I do not see supply coming into the market. That will have its impact on demand. While affordability is driven out of the market, transactions are difficult to come by.” However, he does not see any price correction in the coming time as there is no significant release in supply. Says Hiranandani, “Home loan is growing at 30-40%, compounded. This year there will be a slowdown as product launches are slowing down.”
Shailesh Puranik, MD, Puranik Builders reiterated that the slowdown is taking place because of wrong policy measures and global factors. “There are a lot of supply constraints like policy, scam issues and people not wanting to give permissions,” he said. He added that there is a lot of supply which is not coming into the market which was slated to come in the last year. One of the biggest modus operandi of some builders (exposed by TOI last year) was to show a free-of-FSI car parking deck on each floor. The car deck, each 1,500 to 2,000 sq ft large, would be sold to the flat buyer with the understanding that he could then merge this area into the apartment to make it larger. The BMC has now proposed that car deck areas be included in the building’s FSI. “The suggestions seem to be wise. With the specifications in place it leaves very limited chance for builders to bend the rules without going into blatantly illegal work,’’ said an architect.
About 10 years ago, Mumbai Metropolitan Region (MMR) used to do twice the volume of the National Capital Region (NCR), says Dharmesh Jain, CMD, Nirmal Lifestyle.”Today, MMR does 25% of the volume that NCR does. It is absolutely possible for volumes to happen if we innovate and create affordable homes,” he said. On a lighter note he quipped that today Mumbai does well because of “lack of supply” than because of “supply.” There is a genuine issue of supply, and developers, like buyers, are waiting for the prices to fall in the city. After all, with affordability comes the volumes and who does not want to go for the sales volumes!
