Mumbai: A half yearly survey of the real estate sector has revealed that the Real Estate (Regulation and Development) Act (RERA) compliance and the garbage crisis crippled growth in the Mumbai Metropolitan Region (MMR) between January and June 2017.
The survey revealed that sales of residential property in MMR fell 8% in the last six months as new real estate launches dropped 36%.
“The Bombay High Court has stayed permissions to new projects over saturation of dumping grounds in Mumbai. RERA compliance also deterred builders from marketing their projects, thereby impacting residential sales,” the report released by Knight Frank India on Wednesday said. The lack of clarity on Development Plan 2034 also affected the sector, it said.
Samantak Das, the chief economist and national director for Knight Frank India, said, “On the price front, Mumbai, like other cities, is undergoing a time correction. Going forward, since Maharashtra is one of the frontrunners in having a RERA regulator in place, we believe that this city may come out of the hiccups of policy interventions soon.”
As per the survey, unsold inventory of 1,38,652 units is a concern. “Analysis indicates that developers will take more than two years to exhaust the stock,” it said. Developers, the report said, were pushing to offload unsold inventory, triggering steady sales in the Kalyan-Dombivali belt, the highest among other micro markets.
Mr. Das said the recently rolled out goods and service tax (GST) coupled with the RERA regulations would go a long way in cleaning up the sector and making it more attractive to all stakeholders.
The office sector reflected a similar trend, with sales going down by 19%, as compared to the first half of 2016, the survey has revealed. The banking, financial services and insurance sector, the traditional bastion, also registered a sharp fall. Other services and manufacturing sector, however, recorded a substantial growth, with the figure soaring to a rough estimate of 42%.
Commenting on the instability of the market conditions, Shisir Baijal, chairman and managing director of Knight Frank India, said, “These were the corrective measures long due to transform real estate into a robust, transparent and thriving sector. The short-term hiccups the industry [is grappling with] will eventually fade away and bear rich dividends in future.”
