Mumbai: Construction Boom is on Despite Unsold Inventory Piling up

MUMBAI:

Greater Mumbai could soon resemble a giant construction site.

Last year, the BMC approved new real estate projects with a built-up area totalling about 15 crore sq ft. This area, according to a ballpark estimate, is roughly the size of 15 Nariman Points.

Official data procured by Mumbai Mirror show that 2,473 building project files were approved by the BMC last year, earning India’s largest and richest civic administration a record Rs 13,200 crore as premium fees from developers.

Between January and December 2021, city developers rushed to the BMC offices to pay building premiums, taking advantage of the 50% concession offered by the corporation during this period, and getting their files cleared. Builders who want additional construction rights must pay this premium.

In comparison, about 1,995 projects were approved in the pre-pandemic year of 2019. These projects had a built-up area of around nine crore sq ft.

Civic sources said most projects which were approved last year were for society redevelopment. According to official data, maximum building projects (780) were approved in the Bandra-Andheri belt alone.

The entire eastern suburbs from Mulund to Ghatkopar, Chembur and Kurla recorded 834 new projects.

“The potential supply is a staggering 15 crore sq ft spread over 25 wards of Greater Mumbai. The top eight wards contribute more than 50% of the total proposed supply,’’ said Pankaj Kapoor of Liases Foras, a real estate data and research firm. Kapoor said that the proposed supply of 15 crore sq ft of built-up area approved last year is valued at Rs 2.77 lakh crore (taking an average price in Greater Mumbai of Rs 18,300 a sq ft).

The BMC’s T ward (Mulund West) alone will contribute the maximum supply of 1.5 crore sq ft of built-up area. Borivli, Bhandup, Andheri and Parel-Dadar wards will each see over one crore sq ft of supply.

According to Liases Foras, the total built-up area approved last year will be 111% of the existing unsold stock in Greater Mumbai. Currently, the city has over 13 crore sq ft of unsold inventory, which will take almost five years to sell.

“Property prices in Greater Mumbai will be under immense pressure, even considering the staggered introduction of supply in the market. If just one-third of the potential supply hits the market in the current year, the total stock to sell will swell to 18 crore sq ft. At the current pace of sales of 2.8 crore sq ft per year, it will take 80 months to sell,’’ it said.

A real estate consultant, who did not want to be named, said he feared an oversupply of apartments in the Bandra-Khar-Santacruz market. “I anticipate 1,400 to 1,700 new flats in this belt. The current rates of Rs 50,000 to Rs 1.10 lakh sq ft in areas such as Pali Hill, Carter Road and Bandstand will not sustain,’’ he said.

Meanwhile, the redevelopment market, too, is on the rebound.

Till two years ago, builders were cancelling agreements and surrendering rights to redevelop housing societies in prime localities because of financial unviability. Premiums were high even as property prices fell, forcing builders to step back. However, things have changed now, said sources.

Source: realty.economictimes.indiatimes.com

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