The metamorphosis of Mumbai Real Estate industry

By: Lakshman Bhagtani, Chairman & Managing Director, Jaycee Homes Ltd

The financial and real estate capital of the country – Mumbai, has since time immemorial drawn thousands of people, from all over the country and across the globe, in search of employment and a better lifestyle. The city of Mumbai is like a magnet that attracts people from all walks of life in pursuing their dream.
Mumbai, over the years has grown horizontally, with satellite townships coming up in Navi Mumbai on the one side and Kalyan –Dombivli and Virar – Vasai belt on the other. Given the fact that Mumbai reaching almost land-lock situation, the vertical development seems to be the only way forward.
Of course there are few other options available, such as the sale of Mill land located in pockets of Central Mumbai and redevelopment of old and dilapidated buildings, in south and Central Mumbai. These measures would provide much needed relief to the city which is suffering from tremendous housing shortage and at the same time give fillip to the housing industry. Similar initiatives taken earlier has resulted in creation of more housing stock in the city, thereby stabilizing realty prices, which had gone through the roof.
Around 19,000 odd dilapidated buildings in the island city are in dire need for redevelopment. Many of these building come under the Coastal Regulation Zone (CRZ). Massive redevelopment project planned by the Government offers tremendous growth opportunity to developer community. These projects are designed to meet demand for affordable housing as well as improving living conditions of the people.
As we know, the perils of living in dilapidated buildings have cost us many lives in the past. Therefore, the government has initiated urgent steps to redevelop these buildings on a priority basis. Of course, redevelopment encourages new housing and businesses to locate within already developed areas. It also helps improve public infrastructure systems and facilities.
The demand for housing stock is rapidly growing in the city, while on the other hand there are thousands of ageing buildings which are in dilapidated condition and have reached a stage where it is impossible to carry out structural repairs. It is therefore better to construct new buildings instead.
Today, the need of the hour is to have public-private partnership in this sector. Both, the private developers and the government should work in tandem on various development projects. The PPP model is an excellent vehicle for future developmental projects in the city and if implemented in the right spirit can prove to be a successful model.
Maharashtra Chamber of Housing Industry (MCHI), has already signed a MOU with Maharashtra government almost a year ago. This MoU resulted in formation of the largest Public Private Partnership aimed at making available five lakh affordable homes to middle and lower income groups in Mumbai and adjoining metropolitan region.
The concept of affordable residential housing has been the need of the hour. The city can provide affordable houses through release of land by the government, increase of FSI, reduced taxes, single window clearance on plans and availability of micro finance. These are some of the major bottlenecks that developers have encountered in recent times.
Affordable housing means different things to different people. The term which is meant for middle and lower middle class family is highly misunderstood.
Large land parcels are available in the peripheries of cities where large areas can be demarcated for developing SEZ or housing special zone and we could also work simultaneously on a mass rapid transport system to facilitate the commuters to reach their place of work.
Another urgent need being felt in Mumbai is for providing rental housing. There are people whose jobs are transferable and cannot afford to buy a house in the city. Generally, they get postings in different cities across the country and therefore are always on the move. It is therefore imperative in such cases for the government to provide for rental housing on a large scale.
According to Cushman and Wakefield report, the residential demand for top seven cities is estimated to be 4.5 million units by 2013. Of this, Mumbai is likely to witness the highest cumulative demand of 1.6 million units by 2013 due to various development projects and increasing urbanization in the country.