The real estate sector continues to witness a major slowdown with new launches in the first 6 months of 2017 plunging by a whopping 36% in Mumbai as compared to the same period in 2016. This huge drop in new launches in the MMR (Mumbai Metropolitan Region) is worrying for the industry.
The number of new launches stood at 15, 763 units in comparison to 24, 450 housing units launched in the same period last year. Sales also dropped from 34, 971 units in the same period in 2016 to 32, 077 for this year.
Experts state that there are several reasons behind this decline including the introduction of the Real Estate (Regulation and Development) Act or RERA, demonetization and the stay of the high court on approvals along with an overall absence of clarity on the DP (Development Plan). Also, lakhs of unsold units are currently piled up in Mumbai and this is a major burden for real estate players in Maximum City.
According to Knight Frank India, sales and new launches have gone down considerably in 2017. According to the Chief Economist and National Director-Research at Knight Frank India, Samantak Das, the first two months of the year showed the impact of demonetization and post that RERA based compliance deterred developers from marketing their real estate projects according to him. The Mumbai Metropolitan Region (MMR) encompasses Mumbai, Navi Mumbai, Thane and the Raigad region. Another issue pertains to the embargo placed by the Bombay High Court on new constructions until the BMC (Brihanmumbai Municipal Corporation) makes dumping grounds in adherence to pollution norms.
According to real estate developers, the last 6 months represented a watershed for the real estate industry in the country. According to the Chairman and Managing Director at Platinum Constructions, Shadaab Patel, developers cannot apply for project approvals in case DP remains pending and permissions will not be granted on account of the stay order. He added that there are major hurdles that have been affecting the real estate sector and these have to be urgently addressed.
The real estate sector is passing through a really challenging phase at present and sales volumes are only existent in the affordable housing category and that too within budgets of Rs.50 lakhs. Sales are only happening in peripheral areas and on Mumbai’s outskirts.
