Gurugram’s Real Estate Recovery in 2018

Defining the skyline of NCR- Gurgaon

Gurugram was largely responsible for the NCR real estate market making a steady recovery during 2018. The city witnessed large scale developments in the last couple of years – from public infrastructure and housing projects to commercial and retail developments. Infrastructure developments such as the Dwarka Expressway, Southern Peripheral Road, and Rapid Metro which connects areas in Gurugram such as Cyber City and Golf Course Road to Delhi and NH8, are driving Gurugram’s real estate market.

Gurugram has the third-highest per capita income in India. It is this financial muscle that realty developers are looking to capitalise on, and top developers in Gurugram have been fairly successful in doing so, especially after the implementation of the RERA Act and GST. With improved accountability and transparency, more people are returning to invest in this market.

The Haryana Affordable Housing Scheme or HUDA scheme rolled out by the Haryana government in 2013, has augmented the availability of affordable housing projects in Gurugram and other cities in Haryana. It was envisaged as a sincere attempt to provide affordable homes within the limits of the main city, and the implementation of the scheme has been fairly successful. Below we look at these and other factors that shaped Gurugram’s real estate market in 2018.

The Revival of the Gurugram Real Estate Market

Gurugram’s recovery from the jolts of demonetisation, GST and the RERA Act has been a positive one. Market analysis shows that the sector is slowly adjusting to policy changes and recovery can be observed on both the supply and the demand side. According to a report by property consultants Knight Frank, Gurugram witnessed a 35% increase in launches in 2018, and 8% increase in sales from last year. There was also a 15% reduction in unsold inventory indicating that sales and buyer confidence has picked up in the market.

Improved Infrastructure

Improved public infrastructure generally contributes to an improved real estate market. The completion of the Dwarka Expressway has had quite a direct impact on realty prices and general buyer sentiments. Further improvements and enhancements on DEW will boost Gurugram’s realty growth. Upcoming developments such as the Delhi-Mumbai Industrial Corridor (DMIC), and proposed Jewar Airport are also pushing growth in this region. These developments have ensured seamless connectivity from far-lying suburbs to the office and commercial hubs. Consequently, a number of affordable housing projects are coming up in peripheral suburbs where land rates are relatively low.

New Launches by Established Realty Developers

The region of NCR witnessed a 35% increase in the number of units launched, out of which 52% of the units were in Gurugram. Projects that are near-completion or ready-to-move-in apartments are garnering more inquiries from buyers. Established players such as Godrej, Shapoorji Pallonji, Hero, Sobha, etc. have announced a number of launches in 2018 in Gurugram, indicating the rising stocks of its realty market. Additionally, the commercial market in the NCR region has witnessed a 14% growth in leasing and a whopping 86% growth in new launches. Gurugram was also the leader in the absorption of office spaces, accounting for 66% of the absorption in the NCR region.

Push for Affordable Housing Projects

Residential inventory in Gurugram is priced relatively higher than other regions NCR. However, its relatively better infrastructure makes it an attractive market for aspirant homebuyers. To cater to this demand, HUDA launched a number of affordable housing projects in the last 2 years. Under its scheme flats are priced between 15-25 lakhs, with exemption of maintenance charges for up to 5 years and possession promised within 4 years. The flats were allotted through a supervised lottery. This scheme, as documented, has benefited thousands of families and brought the dream of ‘affordable housing for all’ closer to reality in Gurugram.

It is a model, based on a solid foundation that has found success in Gurugram and offers a template for policymakers elsewhere to follow and replicate. Also, trends such as smaller apartment sizes, integrated townships, ready-to-move-in homes are contributing to the sale of affordable housing projects in the city.

Gurugram’s real estate future’s looking brighter in 2019. A number of projects are nearing completion and attracting interest from buyers. As observed, although the first half of 2018 witnessed a rise in affordable housing projects in the Gurugram market, the second half has seen notable developers launching projects above the 75 lakh price band indicating demand for such developments. The improved infrastructure developments have further attenuated Gurugram’s desirability factor.

How Budget 2018 Impacts Indian Realty Sector

Budget 2018

The presentation of the Finance Budget in India is always a highly anticipated event in the financial calendar. This year’s budget was the last one the current government will present until the general elections next year. Hence, most people expected Finance Minister Arun Jaitley to announce a sops-filled budget. Yet contrary to popular expectations the common man didn’t have much rejoice about in the budget. Beyond the bare minimum for individual taxpayers, budget 2018 did have a few welcome announcements to boost affordable housing, improve air connectivity across the country and allocating more funds for infrastructure development.

Here’s where the Real Estate could benefit from the 2018 finance budget:

Budget 2018
Budget 2018

Affordable Housing

A dedicated Affordable Housing Fund (AHF) in the National Housing Bank will be established to boost the affordable housing sector. The Bank will be funded from priority sector lending shortfall and fully serviced bonds authorized by the Government of India. Additionally, recapitalisation will allow banks to lend 5 lakh crore and attract more developers to this segment, which many have been shying away from. An estimated 51 lakh houses will be built in rural areas in 2018-19. This is a huge boost for low-income housing and achieving the vision of ‘Housing for all by 2022’. However, Pradhan Mantri Awas Yojana (Urban) got a measly 7.64% hike in the allocation at Rs 6,505 crore for 2018-19 as compared to Rs 6,042.81 crore in 2017-18.

We have fixed a target that every poor of this country may have his own house by 2022.”

Smart Cities

Mr. Jaitley announced that 99 cities have been selected with an outlay of Rs 2.04 lakh crore to implement various projects like Smart Command and Control Centre, Smart Roads, Solar Rooftops, Intelligent Transport Systems and Smart Parks under the Smart Cities Mission. At Rs 6,169 crore this is a 54.22% hike as compared to Rs 4,000 crore in 2017-18 Budget. Various schemes associated with the Smart Cities initiative have also received budget hikes such as Atal Mission for Rejuvenation and Urban Transformation (AMRUT) and Swachh Bharat Mission (Urban).

Circle Rates

In major cities the circle rates were increased and were more than the market rates. The resulting gap between the two rates was considered as income for the buyer and seller. In this budget, the Finance Minister has provided relief as regards the circle rates by allowing a 5% gap between the market and ready-reckoner rates. This could potentially revive secondary market transactions which affected by the turbulence generated by demonetisation and lack of liquidity.

Infrastructure

Budget 2018 has allocated Rs. 5.97 lakh crore for infrastructure spending to ensure India’s infrastructure meets global standards. 35,000 kms of roads and highways to be developed under Phase 1 of Bharatmala scheme. Pay-as-you-use system for toll payments will be introduced. UDAN scheme has been announced to connect 64 unconnected airports across the country. Rs 11,000 crore has been allocated to Mumbai rail network and Rs 17,000 crore for the Bengaluru metro. These infrastructural developments when they happen will definitely boost the surrounding localities and the real estate sector by extension.

Cryptocurrency & LTCG

In the 2018 Budget, Mr. Jaitley has stated the government does not recognise cryptocurrencies will do all it can to discontinue its usage. This essentially highlights cryptocurrency as the ‘new black money’ and could find its way into real estate transactions. The government is determined to ensure this does not happen especially in the aftermath of demonetisation.

It has been proposed that long term capital gains (LTCG) over Rs. 1 lakh will be taxed at 10% without indexation benefit. This is expected to force investors to amend their investment preferences and real estate funds may benefit from this development.

The government will take all measures to eliminate the use of these cryptoassets in financing illegitimate activities or as part of the payments system,”

 

Besides these major announcements which are sure to make a significant impact on the Indian Real Estate sector, the budget also announced plans to establish schools of planning and architecture to be set up in the IITs and NITs. This will boost the urgent need for design professionals. Many industry experts feel Budget 2018 could have done more in terms of reviewing FSI and density norms as well as taxability of REIT structures. However, there is enough in it to revive buyer interest and boost a sector that has is slowly emerging from a long sluggish period.

What did you expect from Budget 2018? Tell us in the comments below.

Real Estate Trends Of 2018 Shaped By Events of 2017: An Analysis

RERA Act 2016

At the start of 2017, the Indian real estate sector was grappling with the after effects of demonetisation which came out of the blue towards the end of 2016. However, 2017 brought even more change in the form of the roll out of Real Estate (Regulation and Development) Act, 2016 (RERA) and implementation of Goods and Services Tax (GST). 2017 will be considered as a watershed year in Indian real estate; a year in which the boys of real estate development were separated from the men, and consolidation took place. It will remain the year in which the Indian homebuyer was given his/her due and place in what was seen as a ruthless sector.

While the majority of the notable real estate trends of 2017 were marked by regulation, some were infrastructural. The metros (both tier-1 and tier -2 cities) have seen the implementation of massive infrastructure projects, which will raise the standard of living in these metros, and as a result draw more people and developers to fulfil this demand. Affordable Housing and PMAY has also given broad hope not just to homebuyers in the lower middle class and low income category but also to developers who have been looking to make inroads into this sub-sector but have lacked the right incentives.

2018 is now underway, and as far as real estate is concerned will be dictated by the upheavals and trends of 2017. Let’s review the year gone by and what it holds for 2018.

RERA Act video
The RERA Act of 2016

Real Estate (Regulation and Development) Act, 2016 (RERA)

It was a long awaited regulation and was expected to be homebuyer-friendly. RERA has introduced many much-anticipated checks and balances to even out the playing field in real estate. Developers have been given space and incentives to adhere to their deadlines and steadily clean up a ‘dirty’ sector. They can now focus on completing under-construction projects and maintain transparency about allocation and usage of funds. Homebuyers on the other hand will have recourse to justice should developers continue to flout the rules.

RERA officials have led the way by ensuring timely approvals and granting registration numbers to projects. Maharashtra has been the standout state in this regard and has set an example for a RERA-fied real estate sector. Most of the other states are struggling to get their act together, however, some like Karnataka and Delhi have finally started issuing RERA approvals. As other state authorities take their cues from these frontrunners, homebuyers can expect timely project deliveries and developers can hope for better housing sector performance in 2018. On the flip side we can also expect to see many more litigations related to RERA in 2018 and for sure these verdicts will bring further clarity in the rules, as pertaining to various states.

Goods and Services Tax (GST)

GST was another long awaited regulation. Meant to replace a bunch of other taxes and streamline the rates on many goods and services across industries, GST shook up the economy. Since its implementation, various iterations were made to different rates. In the real estate sector, under-construction properties are being levied a GST rate of 12% while residential rentals are exempt from GST. Thus, GST brought confusion about application and led to increased prices and delayed possession. This proved to be counterproductive given the opposite effect of RERA. However, some developers took advantage of the situation to push sales of ready-to-move inventory by advertising the attractiveness of such properties sans GST. Moreover, developers are yet to benefit from accruals of input tax credit which can they can in turn, pass on to homebuyers. As this and further iterations happen to various rates in 2018, developers hope the GST rate comes down to stoke homebuyers’ interest in new construction purchase.

How does the GST impact your home buying decision
How does the GST impact your home buying decision (Image credit: Sundayguardianlive.com)

A Cleaner Sector?

Experts as well as critics are unanimous about the winds of change sweeping through the sector. The hope and expectation is that the changes are positive, enabling transparency about capital acquisition and allocation, faster approvals to developers, fewer construction delays and quicker possession for homebuyers. This in turn provides opportunities to developers – big and small – to adopt transparent practices and shed the notorious tag that has dogged the sector for decades. One can say with certainty that trust from customers is something the real estate sector has lacked. This is a big factor in any transaction. With these new regulations, as the grey areas start to fade away, there is hope that developers can begin to earn the trust of homebuyers.

Affordable Housing & PMAY

The Pradhan Mantri Awas Yojana was hailed as an enabler and a welcome government housing scheme. Under this scheme the government rolled out plans in rural as well as urban areas to enable more families to access affordable housing. Projects under this scheme picked up steam in 2017 and in the quarter ended September 2017, home sales increased 5% year on year in the top 8 property markets of the country powered by a 24% surge in affordable housing sales. Significant uptick of 11% was seen in the affordable segment with prices less than Rs 25 lakh. This is attributable to the fact that developers are realising the benefit of increasing supply in a category where demand is driven by financial and fiscal benefits under the ‘PMAY Housing for All’ subsidy scheme.

2018 will see further growth in this particular housing market as the government has approved construction of 112,083 more affordable homes under PMAY with an investment of Rs 8,105 crore. This means the total homes sanctioned under PMAY(Urban) has now gone up to 3,052,828. All of this is good news for developers looking to make a mark in this sector as well as for first home buyers looking for quality and affordable homes.

Indian and Japanese PMs at the laying of the foundation stone
Indian and Japanese PMs at the laying of the foundation stone (Source: The Guardian)

Infrastructure Developments

Across the major cities, huge investments were made in upgrading existing infrastructure as well as installing new ones. This includes expansion of metro projects in Delhi, Bengaluru and Mumbai while Hyderabad will see the launch of metro transport. Additional lines connecting distant suburbs will enhance connectivity and improve travel times and provide better commuter experiences. Simultaneously big ticket projects like the Delhi-Mumbai Industrial Corridor (DMIC), Dwarka Expressway (now provided National highway status), India’s first Bullet Train from Mumbai to Ahmedabad, and the new airports in Navi Mumbai and Jewar are aimed at boosting trade, infrastructure and standard of living across the country. Work on most of these will continue in 2018 and some like the Dwarka Expressway will be completed.

Overall, 2017 can be considered a busy year. It brought upheavals and yet signalled major changes and overhauls in the way the industry was operating. There can be opportunities in change and it is up to the major real estate companies to lead the way even as smaller companies are seen to be adapting quickly and eating into market share. For homebuyers this is a wait and watch period to observe how these changes unravel and what benefits it brings. They also need to focus more on doing their own due diligence and research, before making a decision. Public RERA portals provide access to information like never before thus enabling informed decisions. 2018 is definitely a year to watch out for in Indian real estate.

Chembur Central By Crystal Xrbia – Connected Township

Purchasing a home in Mumbai is a lifetime’s dream. Many families work all their lives to save enough to buy a home. One hears numerous stories of couples who move into their own post retirement. The younger generation today is bolder and changes in the economy have enabled them to earn more and avail cheaper home loans than their parents before them. Despite this, one’s own home is still out of reach for most if not all. Developers are thus motivated to participate more energetically in an emerging residential market called affordable housing or economy housing or smart housing or even compact housing. Crystal Xrbia’s brand new project in Mumbai’s Ghatkopar called Chembur Central is one such housing development.

Crystal Xrbia is a partnership between Luxury Developer ‘Crystal Group’ and Affordable Housing Leader ‘Xrbia’. Xrbia Developers are well known for developing global standard affordable housing in Pune such as townships in HInjewadi, Ambi, Chakan, Talegaon and Balewadi among others. Chembur Central in Mumbai is just their third after projects under-construction in Vangani and Neral. With Crystal Xrbia’s latest project the focus is on maximising minimum space. The largest apartment size in Chembur Central is 306 sq. ft. which is a 2 BHK and costs Rs. 72 lakhs approximately. Most would consider this price a steal, considering the location and connectivity the project enjoys in addition to the amenities. Let’s take a look.

Chembur Central site layout
Chembur Central site layout

Location and Connectivity

Chembur Central is located in Ghatkopar, right on the Eastern Express Highway (EEH). A service road off the EEH provides access to the project site. So one can say the EEH is literally next door! Besides this major arterial route, the future residents of Chembur Central can access the Eastern Freeway (5 mins) for commute to South Mumbai, Santacruz-Chembur Link Road (10 mins) to reach western suburbs via the Western Express Highway, Chembur-Wadala Monorail as well as the Ghatkopar Versova Metro rail. A plethora of BEST buses plying along the highway as well as autos are an additional commuting option.

The various routes outlined above provide access to business and commercial hubs – South Mumbai, BKC via SCLR, Lower Parel via Monorail (the imminent completion of second phase will extend connectivity beyond Wadala to Lower Parel), Andheri via the Metro and, Powai and Vikhroli via the EEH and connecting roads on-route. Navi Mumbai is also accessible via the Old Vashi bridge or the Mulund-Airoli bridge. The Central railway stations of Ghatkopar and Kurla as well as Harbour railway stations of Tilak Nagar and Chembur are easily accesible for train commute to various parts of the city.

Internal road to the main construction site being laid at Chembur Central
Internal road to the main construction site being laid at Chembur Central

Needless to say, the many working class families who will occupy apartments at Chembur Central will have various options for commuting to their workplaces or leisure travel. The domestic and international airports are 11.8 kms and 9.2 kms respectively.

Social Conveniences

Ghatkopar is not just a central suburb of Mumbai, it is also centrally located. It is surrounded by the suburbs of Chembur, Kurla and Vikhroli. Well known schools such as Garodia International, RBK International, Guru Nanak and Modern English School are in a 1 km radius. The multi discipline K J Somaiya College is approximately 2 kms away. Hospitals such as Lotus ENT, Aashirwad Heart and Bombay City are quickly accessible. Phoenix Market City mall is in Kurla and R-City is in Ghatkopar for a variety of entertainment options. Chembur Central is close to numerous gardens and green spaces such as Gandhi Maidan, Diamond Garden, Ambedkar Udyan and Sandu Garden as well as popular clubs such as Acres Club & Chembur Gymkhana, Bombay Presidency Golf Club and Jolly Gymkhana.

Project Layout and Configuration

Chembur Central Sample 2 BHK
Chembur Central Sample 2 BHK

The residential township of Chembur Central will be constructed in two phases over 5 acres of land and will have more than 2000 units for sale. Work has already begun on the first phase which includes six 27 storeyed towers on 2.5 acres. The various apartment options available include studio, 1 BHK and 2 BHK. Note the configuration and prices below:

Apartment Size (in sq. ft.) Price (in Rs. excl Tax)
Studio 186 44 Lakhs
1 BHK 246, 275 57 – 64 Lakhs
2 BHK 305, 306 71.5 – 75.8 Lakhs

The 1 BHK and 2 BHK are available in two types each, wherein internal room configurations vary slightly to accommodate slightly larger living room or bedroom/s. All variants of apartments will have a single toilet-cum-bathroom. Additionally a dry balcony will be provided. Possession is expect in 2022.

Chembur Central Sample 1 BHK
Chembur Central Sample 1 BHK

Features & Amenities

Crystal Xrbia has ensured has despite the economical prices of the homes in Chembur Central, residents will enjoy widely accepted standard amenities. These amenities include clubhouse with gymnasium, multipurpose room for community events and get togethers, a jogging track, kids play area and mini golf course. There will 3 levels of basement car parking facilities.

All internal amenities will also be standard including sanitaryware and fixtures by ROCA or Johnson or Jacquar. All rooms will have vitrified tiling while bathrooms will have anti-skid tiles. Power backup for all common facilities and lifts will be provided.

Chembur Central is RERA registered with the following Maha RERA numbers for the six towers – P51800003446, P51800005456, P51800004566, P51800006239, P51800006139, P51800003201.

Chembur Central site
Chembur Central site

All things considered, Chembur Central, which has been designed by celebrated architect Hafeez Contractor is shaping up to be a smartly designed housing township in the center of Mumbai. Crystal Xrbia’s aim of empowering more families to buy their own home in the maximum city is well thought out with prices within the grasp of most. The current rate in the surrounding area is Rs. 27000 per sq. ft. whereas apartments in Chembur Central are currently available at Rs. 23000 per sq. ft. A centrally located township with scenic views of the Vashi creek and apartments at affordable rates, Chembur Central is a project one should definitely consider while planning one’s home buying strategy.

Marathon Realty: Pioneering Real Estate Development in Mumbai

Marathon Realty has a long-term vision to be one of the best developers in the Mumbai Metropolitan Region (MMR). It has a number of allied goals to achieve this and among its stated aims, are to be the “Most Trusted Developer in Mumbai Metropolitan Region” and provide “Best in Class Design”. One look at the company’s achievements and accolades over the years demonstrate that it appears to be well on track towards fulfilling this vision.

Since its inception 46 years ago, Marathon Realty has been developing residential, commercial and retail space in Mumbai and its wider metropolitan region. It has already completed more than 80 projects and is currently developing 18 million square feet of land and 2 million square feet of business space. The company is helmed by Mr. Ramniklal Shah – Chairman, Mr. Chetan Shah – Vice-Chairman and Mr. Mayur Shah who is the Managing Director.

Monte South (Source: Marathon Realty)
Monte South, Byculla (Source: Marathon Realty)

Marathon – The Innovator

Marathon Realty has been a pioneer of sorts in the real estate sector. Among the firsts to its credit are the first seven storey apartment building in Mulund, with a lift, back in 1972, and the first high rise tower in Mulund in 1996 called Antariksh, standing tall at 192 feet (which still commands a higher resale value than the prevailing market rate). Marathon Realty is also the first real estate company in Mumbai to adopt cutting edge technology in construction like the Aluminum Shuttering System (suited to Indian homes and enables easy maintenance), the efficient and versatile German PERI table formwork and STEN technology used in developing Marathon Futurex, an iconic commercial structure in Lower Parel.

Awards and Accolades

It is innovations like these that have won Marathon Realty many accolades like “Best Residential High-rise Architecture India 2017-18” by Asia Pacific Property Awards Architecture for their Monte South project, “Best Upcoming Green Project of the Year – 2015” by Construction Times Builders Awards – 2015 for Marathon Futurex, and National Award for “Best Residential Apartment – Low Cost, Metro” from CREDAI on August 11th, 2012 for Marathon Nagari.

The feather in Marathon’s cap however are the recent awards it bagged at the Asia Pacific Property Awards held in Bangkok on May 25th & 26th, 2017. The company was awarded two 5-star awards for Marathon Futurex: “Best Commercial High-rise Architecture India 2017-18” and “Best Commercial High-rise Development India 2017-18”.

Marathon Realty has also received the distinct honour of being nominated to represent India and Asia Pacific to compete against other companies within the Asia Pacific region to become Best in Asia Pacific and perhaps ultimately the Best in the World.

Marathon Futurex (Source: Marathon Realty)
Marathon Futurex (Source: Marathon Realty)

Iconic Developments

Marathon Futurex is an iconic commercial development coming up in the business hub of Lower Parel, Mumbai. The building is being constructed with the latest in construction technology and features standout design and world class amenities. It has also received the coveted IGBC Gold Pre-certification for eco-friendly practices like its green energy saving design and use of solar energy and sky gardens. The building’s strategic location ensures that some of the best companies and businesses will occupy this iconic structure.

Monte South in Byculla, South Mumbai is Marathon’s award winning, luxury residential development, offering residents premium amenities and breathtaking views of the Mumbai cityscape. It is located in a premium part of the city with access to major business hubs and social infrastructure. Being constructed with Korean Kumkang Construction technology, Monte South will have 2.5 and 3.5 BHK residences.

Developing New Residential Locations

The inevitable strain of soaring demand for affordable housing on Mumbai’s limited land resource has pushed future residential developments towards the city’s periphery. Even locations like Thane have reached saturation levels. Marathon Realty is one of the few realtors who are leading development in the new affordable residential hubs like Kalyan-Shil Road, which is being considered as the new Ghodbunder Road.

Marathon Nextown (Source: Marathon Realty)
Marathon Nextown, Dombivali (Source: Marathon Realty)

There are numerous proposed and under construction infrastructural developments taking place in and around the Kalyan-Dombivali-Bhiwandi area. These are expected to boost connectivity and growth, decongest existing services, improve employment opportunities and the overall standard of life of current and future residents.

  • Navi Mumbai Metro line
  • Mumbai Nasik Highway at Bhiwandi
  • Bhiwandi-Kalyan-Shil Phata Expressway
  • Alibaug-Virar Multi Modal Corridor
  • Dedicated Freight Corridor
  • Navi Mumbai International Airport
  • Sewri-Nhava Trans Harbor Sea Link
  • Panvel-CST AC Rail Service

(source: MMRDA)

Mumbai, Thane, Navi Mumbai as well as seven development centres of MMR like Virar, Bhiwandi, Panvel, Kalyan, Dombivali, Taloja, and Uran are expected to benefit greatly in terms of commercial and retail economic opportunities.

Marathon Realty is developing residential projects in three of these areas – Marathon Nextown off the Kalyan-Shil Road and Marathon Nexworld in Dombivali East. Marathon Nextown offers intelligently designed 1 and 2 BHK apartments with modern amenities.

Nexworld in Dombivali is being designed as a mega township with 1 and 2 BHK apartments starting at Rs. 28 lakhs and Rs. 49 lakhs respectively.

Marathon Nexzone (Source: Marathon Realty)
Marathon Nexzone, Panvel (Source: Marathon Realty)

In Panvel, Marathon has planned Nexzone, a township that offers 2, 2.5 BHK and combination apartments, starting at Rs. 61 lakhs* onwards.

With these projects, Marathon Realty is clearly projecting itself as a multi-dimensional real estate company which is not just focused on luxury residential but also on iconic commercial developments. The company also cares about being a pioneer in developing good quality, affordable housing in upcoming residential hubs witnessing a rapid scale of infrastructural development.

Has The Death Knell For Affordable Housing Around Mumbai Been Rung?

PMs Housing For All by 2022

—Views of Vivin Mathew and Shafique Ansari – Directors, Irasa Housing

Last week the Maharashtra State Government passed a Government Order (GO) that will kill all affordable housing around Mumbai. The GO states that the three main areas around Mumbai where affordable housing is currently being developed have now become Green Zones. The areas of Shahapur, Palghar and Raigad, where most homes are sold in the sub Rs. 25 lakh range, have now become No-Development Zones except for very few slivers of land.

In the last 15 years these three areas have, estimates say, delivered around 5 lakh homes in the sub Rs. 25 lakh range. No other area close to Mumbai hass been able to produce as much supply of affordable housing as these. Now only those projects which already have approval will come up. No new projects in these areas will be approved. With lower supply, expect prices to dramatically go up in the next few months.

Prior to this GO being issued, the areas of Shahpur, Palghar and Raigad were Free Zone where a developer could buy land and use it for residential or non-polluting industries. These were the only areas around Mumbai where land was available at less than Rs. 1 crore per acre. Therefore it was the perfect feedstock for affordable homes. Now that is gone.

Beaches add to Palghar's appeal
Beaches add to Palghar’s appeal

Home prices will go up all over Mumbai

Over the next few months, we expect all developers that have approved projects around Mumbai in these areas to tighten prices knowing that with lower supply coming in, prices are bound to increase.

The prices of the tiny slivers of land in these areas where development is still allowed will dramatically go up. Again leading to increased prices of homes.

Prices within the far flung suburbs of the city of Mumbai will also tend higher. Areas like Panvel, Thane, Kalyan, Virar will all see a hardening of prices as the competition from the lower priced homes substantially reduces.

All this means that the lowest priced homes around Mumbai will now be in the Rs. 30 lakh range. For someone to be able to afford that, they will have to earn at least Rs. 50,000 per month.

Land prices will increase

As Affordable Housing developers seek to stay in business, they will start trying to buy land within the development areas in Mumbai’s far flung suburbs. This will ensure that land in those areas will go up almost immediately. Again that will mean no more affordable housing around Mumbai.

Raunak Group's Raunak Heights is an example of affordable housing
Raunak Group’s Raunak Heights is an example of affordable housing

Increased Job Losses

Another unfortunate aspect of this order will be a loss of jobs. The only sector of Mumbai’s housing market that has been able to keep its head above water in the last few years has been Affordable Housing. This sector, directly and indirectly, employs close to 10 lakh individuals. Now many of these people will be unemployed once the projects they are currently working on come to an end.

Puzzling Move

In a city where it is said, “It is easier to find God, than a home”, it is indeed puzzling that a move like this has been taken by the state government. This will make it even more difficult for those at the lower end of the social pyramid to be able to afford a home.

Our Prime Minister has said he aims to provide “Housing for All” by 2022. As a result there are many wonderful schemes like the Pradhan Mantri Awas Yojana which gives a government subsidy to people looking to buy their first home. But this move by the Maharashtra Government flies in the face of all these efforts. One hopes that the government realises this and rolls back this move. Else be prepared to see a big increase in prices of real estate in Mumbai in the next few years.