Real Estate Stocks in The Red After Rallying up by 10 Percent Post The Approval of Mumbai Development Plan 2034

The Mumbai development plan gives 3,700 hectares of land for construction of residential houses particularly in the affordable category considering 2,100 will be allocated for low cost housing. The land was earlier marked as no-development zones.

After rallying up by almost 10 percent, shares of several real estate companies ended in red on Thursday following the approval of Mumbai Development Plan (MDP) 2034, which was proposed over three years ago. For example: Oberaoi Realty was down by 19.71 percent at Rs 549.50. Mumbai-based Indiabulls Real Estate also closed 2.55 per cent down at Rs 202.555 .

DB Realty, another Mumbai-based real estate company, however, rose by 1.60 percent closing at Rs 69.15. Delta Corp jumped up by 2.20 per cent. Leading the pack was Phoenix Mills that jumped up by more than 9.85 percent at Rs 610.10 following the news of approval of the plan.

It is expected that MDP 2034 Mumbai will give a push to the real estate industry and will also solve the problem of affordable living in the city. The Mumbai Development Plan gives 3,700 hectares of land for construction of residential houses particularly in the affordable category considering 2,100 will be allocated for low cost housing. The land was earlier marked as no-development zones.

Ravi Ahuja, Senior Executive Director, Mumbai and Developer Services at Colliers International India, says, “The much awaited DP2034 has pronounced its intent towards meeting ‘Housing for All’ by 2022, by permitting concessions to develop affordable housing on vast Salt Pan Lands. Mumbai’s residential prices have been long unaffordable. The policy measures are intended to provide a respite from high prices.

The development plan has also given incentives to the commercial sector by giving extra floorspace index (FSI). About its impact on the commercial sector, Ahuja said, “The increase in FSI for commercial user to 5 in Mumbai augurs well to develop quality office stock. One must look up the premiums payable for such use (if any) as these will lead to increased costs. However, incremental supply due to increased FSI is expected to keep office rental and capital values of under reasonable check.”

He added, “I expect higher Commercial FSI to encourage existing premium and luxury residential plans to convert to commercial, particularly given the stagnancy in residential sales for premium and luxury segment developments & its ongoing correction, and compliance complications being faced under RERA by residential projects. I expect Developers to initiate conversion from residential to Commercial in identified locations.Office leasing demand continues to be steady at approx. 5 to 6 million sf p.a. in Mumbai”

While affordable housing is a good news for the city, there are many other challenges that needs to be tackled ranging from lack of proper civic amenities to snarled-up traffic. For the balanced growth of the city, infrastructure development needs to keep a pace with the rise in housing facilities .