Mumbai’s real estate industry expects Modi to lower property rates

In the previous years due to highly quoted prices, Mumbai real estate industry had to go through slow down in sales and responses. Several projects were left incomplete due to lack of environment clearance, disputed lands, incomplete approval from authorities, and very often builders were lacking financial support. With the win of Modi led BJP as the new central government, real estate industry expects revival with efficiency in approval process and easier and smoother bank funding.

Currently, the main factors affecting the growth of real estate market of Mumbai are:

• Improved policies of government for boosting the real estate sector.

• State government’s take on its policies related to New Development-Controlled Regulations, Redevelopment, Slum Rehabilitation Act (SRA) and Floor Space Index (FSI).

• Impact of infrastructure changes across the Mumbai Metropolitan Region for boosting the real estate industry.

• Role played by MMRDA and MHADA in the real estate housing sector.

• Reasonable and affordable housing policies.

• Other various factors important for market dynamics like holding capacity of developers, their strategy for sales, acquisition costs, peer pressure for competition, premium on a brand, amenities involved in the project etc.

What about the factors affecting the property prices? These are land cost, price of raw material, technology, labour and others. The existing stock of homes in the city has been constructed with high prices of land and raw materials. Thus, it would not be fair to expect immediate price corrections.

So what are the actual demands or expectation of Mumbai real estate industry? Let us elaborate it:

• A confident government with firm policies for making reality market strong.

• Quick and single window clearance system.

• Easy availability of raw materials at subsidize cost.

• Tax incentives and simpler taxation system.

If all these problems are resolved successfully, it will be a great help in controlling the skyrocket prices in real estate industry and the dream of Modi’s government of ‘a home for all’ in a city like Mumbai will not be a dream anymore.

So, are we seeing any positive changes since the new government? Well, just even before the elections the Housing Sentiment Index (HSI) reflected the signs of improvement in consumer sentiments in Mumbai. HIS is a sentiment index of the Indian real estate market that captures buyer ‘mood’ and acts as a sign of changes in real estate market performance.The HSI improved by 24 per cent as compared to a rise of 5 per cent in the last quarter. The HSI for Mumbai has moved even above 100 for the very first time in four quarters and today it has reached up to 106.
Though with this year we have seen progress in the overall economy, still lot of work needs to be done to revive the lost confidence in the real estate sector. Start of 2014 was quite positive for Mumbai real estate as it saw almost 20 to 30 percent of increase in the sales but later closer to elections transactions started coming to a standstill.