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Listed developers from Delhi, Bengaluru planning to launch housing projects in Mumbai

As the realty market favours players with a proven record on project execution, pedigree developers see fresh opportunity in Mumbai. DLF, Puravankara lead trend. Maharashtra decision to cut premium on real-estate projects by half till Dec 31, 2021, also attracting builders from other states

Representative image

Representative image

Several listed developers are planning to enter Mumbai’s housing market, taking advantage of the market sentiment, which, during COVID-19 times, favours grade 1 branded players with a track record of execution. The Maharashtra government’s decision to cut the premium on real-estate projects by half till December 31, 2021, is also luring builders.

Delhi-based real estate major DLF and Bengaluru-based Puravankara are two examples.

DLF is planning to launch a project for sale in South Mumbai’s Tardeo area, where it has completed about 50 percent of the project it undertook several years ago under the Slum Rehabilitation Authority (SRA) scheme.

“The SRA project took off almost 15 years ago and 2,089 tenements have been handed over to slum-dwellers. It is an ongoing project. DLF plans to construct and sell buildings after the slum rehabilitation project,” Rajeev Talwar, CEO, told Moneycontrol.

SRA project


Under an SRA project, a company is entitled to construct buildings for sale after completing its slum rehabilitation project portion. Depending on the percentage of the slum project completed, it can construct buildings.

“That ensures two things – there is an investment by the builders and the slums are removed. Depending on the percentage set by the Municipal Corporation of Greater Mumbai (MCGM), the developer can construct 20-25 percent of the building for sale. We have reached that stage where we have done about 50 percent of slum rehab. By that count, we are allowed 27 percent of the sale portion. That is what we are planning over the next one year,” he said.

Under the SRA scheme, slum-dwellers get houses free of cost but they cannot sell or rent units. As per SRA rules, pre-2011 slums are eligible for rehabilitation. The SRA scheme is driven by offering high floor space index to builders as a sop.

Talwar said that the Maharashtra government’s decision to halve the premium on real-estate projects is a great opportunity. “There will be an attempt by every developer in Mumbai to launch projects within a year now. Our intention is to launch it as early as possible, subject to all approvals and clearances, market conditions and the obligations to slum developers,” he added.

Puravankara’s plans

Bengaluru-based realtor Puravankara is planning to launch a project in Chembur soon. It’s an ultra-luxury property that comes under their World Home Collection (uber luxury properties segment), and the prices reflect that, local brokers told Moneycontrol.

The company did not respond to queries sent by Moneycontrol.

Bengaluru-based Prestige Estates is planning to launch a project in Byculla, followed by Mulund in the next few months, brokers said.

Prestige Jasdan Classic is located at Byculla, South Mumbai. The plot is spread across 2.1 acres on which it has 2 luxury towers offering 240 units with G+9P+37 floors configuration. The inventory mix starts from 2BHK, 3BHK and 4BHK homes.

“The work for Prestige Jasdan Classic towers in Byculla is already underway. The launch is slated for May or June 2021. It is a luxury project with 2, 3 and 4 BHK homes with excellent views,” Venkat K. Narayan, Chief Executive Officer, Prestige Group told Moneycontrol.

Premium on real-estate projects

After reducing stamp duties to boost residential sales, the Maharashtra government, on January 6, approved the proposal to cut the premium on real- estate projects by half till December 31, 2021.

Premium typically refers to the multiple charges levied by the state with respect to approvals for initiating, proceeding, and completing the area or additional area in a project.

“Of late, several A category developers from within Mumbai and outside Maharashtra are planning to launch projects in the city. They are planning to take advantage of the market sentiment that favours pedigree developers with a delivery track record, and also the 50 percent concession by the Maharashtra government on premium,” Ritesh Mehta, senior director and head, West India, residential services, JLL India, said.

“Tardeo is located in central Mumbai. The Imperial, developed by Shapoorji Pallonji, is currently being traded at Rs 65,000 per sq ft-Rs 70,000 per sq ft on carpet. Apartments in Tardeo area range from Rs 45,000 per sq ft-Rs 65,000 per sq ft on carpet, which means that a 1,500 sq ft apartment would cost around Rs 8- Rs 9 crore,” Mehta explained.

In the Chembur area, projects are priced between Rs 25,000 and Rs 27,000 per sq ft, and in Byculla, the prevailing rates are in the range of Rs 35,000 per sq ft - Rs 40,000 per sq ft on carpet. Properties in Mulund command a price of Rs 23,000 per sq ft-Rs 25,000 per sq ft.

K-shaped recovery 

An analysis by ICRA this week said that the residential realty sector is witnessing a K-shaped recovery with large listed players recovering at a much better pace than smaller, unorganised players.

A K-shaped recovery happens when different sections of an economy recover at starkly different rates.

While the broader market remained 24 percent below the pre-COVID levels on a Y-o-Y basis in Q3 FY2021, and 39 percent below pre-COVID levels in the nine months ended FY2021, the top 10 listed realty players witnessed a 61 percent Y-o-Y growth in Q3 FY2021 and 13 percent growth in 9M FY2021, it said.

This disparity in sales growth rates has led to accelerated consolidation in the aftermath of COVID-19 and the market share of the top 10 listed realty players has nearly doubled in the current year, increasing from 11 percent sales in FY2020 to 19 percent in 9M FY2021.

Large developers have been benefitting from demand consolidation and better credit availability. In terms of launches as well, their market share has increased from 11 percent in FY2020 to 22 percent in 9M FY2021, it added.

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Vandana Ramnani
first published: Feb 25, 2021 12:43 pm
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