Mumbai: Real estate launches hit after the implementation of RERA

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The new Real Estate Regulatory Act (RERA) has hit the real estate sector hard. With recent reports stating that the Mumbai Metropolitan Region has recorded 36% less new real estate launches between January and June 2017. Another factor is the stay passed by the Bombay High Court on permission for new projects in light of the over saturation of dumping grounds in the city.

In a report by the Times of India, in a Knight Frank India report, India Real Estate (January to June 2017) said that the new RERA rules prohibit builders from marketing their projects, which has impacted sales adversely. To put things into perspective, the first half of 2016 saw 24,450 flats launched while in the first half of 2017 had only 15,763 units being released into the market.

But, this drop seems to be confined to units that cost more than 50-75 lakhs. The study mentioned that while the sales dropped by 8% when compared to last year, the number of units launched that cost lesser than 75 lakhs were up by 56% during the first half of 2016 to 84% in 2017. The study mentioned that a significant number of new launches below the Rs 50 lakh range took place.

"Launches have been hit more than sales. Developers are giving priority to completion of projects and becoming RERA compliant, which eventually will augur extremely well for the industry. Sales were 8% lo wer than the same period last year due to demonetisation. 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," Samantak Das, chief economist and national director, research, Knight Frank said.

The report stated that the unsold inventory of 1,38,652 units remains a concern. But analysis indicates that developers will take more than two years to burn through this stock. They are likely to be pushing to offload inventory which has led to steady sales in the Kalyan-Dombivli region.

If we were to break down the sales across the city, it looks like the central suburbs have been thriving well - sales wise. The report mentioned that smaller apartments and lower prices have fueled this rise in launches in the central suburbs with Vasai-Virar and Mira-Bhayandar making up a large share of the sales in the western suburbs. In the unsold segment, the peripheral suburbs of Mumbai had the greatesr number of unsold flats at 31,758 unsold flats, while the number in the peripheral western suburbs was 22,126.