Maharashtra Housing and Area Development Authority (MHADA) is at the forefront of latest developments concerning the Mumbai realty market. The Government in Maharashtra is considering a partnership between the housing body of the State and private real estate developers for coming up with affordable housing projects. If this decision is ultimately implemented, it could mean a major boost for the city’s real estate sector, particularly in terms of opening up new and more affordable real estate supply for the lower and middle income groups.
Housing Minister of Maharashtra, Jitendra Awhad, has recently opined that both MHADA and private real estate players can function as equity partners and has also confirmed that MHADA will be more than willing to tie up with private developers for building affordable housing. This will naturally split up the risks for both parties according to him. MHADA will be taking equity in these affordable housing projects while also ensuring swifter approvals and additional assistance to builders. However, the final framework for the new policy is still being worked out as per reports.
How this will benefit the housing market in Mumbai
According to industry experts, this is a good model for affordable housing and will benefit all parties/stakeholders which include future end-users or home buyers. Real estate developers will naturally want to tie up with MHADA for this purpose. Reputed private realty players will be offering more efficiency, expertise, contemporary design and project agility while MHADA being an equity partner will equate to faster Government approvals and permissions. There will also be higher credibility for the project as far as home buyers are concerned.
With the involvement of a Government agency in these affordable housing projects, buyers will naturally have greater assurance and security about their purchases. Awhad has also confirmed the interest shown by Emaar Properties PJSC for development of real estate projects in the MMR (Mumbai Metropolitan Region). The Dubai headquartered real estate developer is likely to hold a meeting with the Maharashtra Housing Minister within a few weeks. The minister, on his part, has assured developers that he is all for affordable housing and will carry out all necessary steps in this regard. The State Government is also planning to construct affordable housing projects on a part of unused land under the land for the special economic zone (SEZ) in Mumbai which is the most expensive realty market in the country. The provision was formerly introduced by ex-Chief Minister, Devendra Fadnavis as part of the 2015 Maharashtra State Housing Policy & Action Plan. Yet, the draft policy was not previously tabled in the form of a bill in the State Assembly. This will now be fast-tracked by the Government according to Awhad. This model has been successfully implemented in several Indian States like West Bengal, Haryana and Uttar Pradesh in the past.
This partnership will be a win-win proposition for both real estate developers and customers and even MHADA. Since there will be project-level involvement for the Government agency, the terms of financing are expected to be a lot easier as well. The SEZ developers from whom the Government will take a portion of land for building affordable housing projects, will be paid the same prices as paid by them for acquiring the land from the Government. The Minister has also held a meeting with the Chairman of State Bank of India (SBI) and is also planning to hold talks with representatives from the IBA (Indian Banks’ Association) soon for analyzing the funding scenario for real estate.
Other developments at MHADA
MHADA has also made the headlines for several other reasons in recent times. The Maharashtra Government will be reserving in excess of 1,800 flats out of 9,140 flats developed by MHADA at Kalyan, Thane and Navi Mumbai. These flats will be reserved for Class 4 Government employees and police constables. Jitendra Awhad has also announced impending changes for the housing policy of Maharashtra while talking about securing the approval of the State Cabinet for 20% reservations under MHADA for government employees and constables.
The lottery will take place in March this year for the 9,140 affordable home units. MHADA may be floating its advertisement for this lottery sometime soon. Within the next three years, MHADA is planning to develop close to 5 lakh affordable homes in Maharashtra as per reports. This will equate to 50,000 affordable flats for semi-government employees and Class 4 Government employees along with 50,000 flats for constables as well. MHADA is also evaluating its present land bank and may take up redevelopment projects in the future as well. Its affordable housing initiatives will naturally increase housing supply in and around Mumbai, thereby helping keep prices in check while drawing more buyers at the same time. The industry will benefit from a private-public partnership in the affordable housing space, particularly in a costly housing market like Mumbai.