It’s looking like the real estate sector is still aching from the blow of demonetization, the RERA and not showing any significant sign of recovery in Mumbai and other Indian cities. This becomes apparent going by the number of new launches up to June, 2017 which has reduced by 36 % compared to last year during the same period.
The number of new launches is 15, 763 units in comparison to 24, 450 residential 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.
Same scenario can be seen in other Indian cities as well; residential Project launches in top cities, including Mumbai, Delhi-NCR, Bengaluru and Chennai, have reduced by about 8 % between April 2016 and March 2017 compared to the same period a year ago - according to a report by property consultants Cushman & Wakefield.
According to real estate consultancy firm Knight Frank India, new launches and sales both have dipped this year. “The first two months witnessed the effects of demonetization and after that, RERA compliance deterred builders from marketing their projects,” said Samantak Das, chief economist and National Director-Research-Knight Frank.
As per the industry experts state that there is more than one reason behind this sorry state of residential real estate segment of India. Demonetization and the introduction of RERA are the major reasons why the industry has taken a step back and at present is readjusting itself to the changed scenario.Under RERA, all new under-construction projects must be registered with the authority and the developers without registration won't be allowed to advertise or sell projects. Naturally, many small to mid size developers are negotiating their moves and that is directly impacting new project launches in Mumbai city and a few other cities as well.
In May, 2017, The Bombay High court rejected a petition filed by Maharashtra Chamber of Housing and Industries (MCHI), seeking to lift the ban imposed on new constructions in the city. A division bench of Justices Abhay Oka and Chandrakant Bhadang ruled out the lifting of the ban stating that the civic body couldn’t comply with the municipality solid waste management rules (MSW). The court had put an embargo on new constructions, barring redevelopment and slum rehabilitation projects in 2016 and it’s likely that the ban will continue till 2019. This too is surely impacting new launches in a negative manner.
Maharashtra being one of first few Indian states to implement RERA; it’s just a matter of time that Mumbai real estate scenario will get to witness a positive phase soon – a section of the experts believe. With the RERA becoming a reality now, the developers must act fast and comply with the new policies to turn the things around. Property prices have already dipped in cities like NCR, Bengaluru and parts of Mumbai during the first quarter of 2017. It’s also the time when the developers are offering many attractive payment schemes and/or incentives to sell their unsold inventories.
With the introduction of GST, transparency and accountability are likely to help the ailing industry to regain its foothold in near future. Right now, everyone is speculating moves and waiting for brighter days.
Authored: 9amstories editorial