A recent study by Mercer’s 2011, Cost of Living Survey claimed that New Delhi (rank 85) is India’s most expensive city followed by Mumbai (rank 95). The Brihanmumbai Municipal Corporation (BMC) seems to have been taking steps to improve Mumbai’s rank and have designed a new policy which will hike property prices in Mumbai by atleast 15-20%
BMC has finalized new building approval guidelines for Mumbai based on recommendations of the state-appointed Justice Parkar Committee. The new guidelines aim to make the approval process more transparent and high-rises safer. The new policy also proposes to limit concessions allowed to developers (extra FSI) and levy higher charges for availing them.
What is this new policy under making?
Developers in Mumbai currently avail 20-40% extra FSI for free or at minimal cost. These areas are included in the super-built-up area (1.4-1.7x carpet area), which the customer eventually ends up paying for. Charging for the extra FSI at current market rates would increase the total project cost by Rs1,500-3,000 per sq. feet depending on the location of the project
What happens to the Mumbai residential market?
Approvals for projects have been slow since past two quarters; the new policy is expected to further delay the process as BMC might decide to re-look all projects based on new guidelines
Project Developers will be required to change their layouts / building plans if the additional area exceeds 25% of the built-up area, which would further delay new project launches.
Slowdown in new launches would support the high property prices and prevent any significant price correction
The implementation of new guidelines will have significant impact on the Mumbai real estate market as it may lead to substantial increase in project costs for developers.
Given that the developers have been reluctant to cut prices in the recent past despite a significant slackening of demand, this move is unlikely to act as an incentive to reduce prices in a hurry. In short, the implementation of these guidelines may well prolong the slowdown in the market and keep the property prices high enough.
I think the next Mercer survey will definitely claim Mumbai on a higher rank if this policy is implemented. What say?
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Very informative article. After Delhi (Rank-85), Mumbai(Rank-95) is next expensive city in the world. Well, as i know it is because of grand investors, developers,Businessman, Leaders. Financiers and Bollywood expensive Actors. People comes under these category holds too much money for the grand investment in real estate business. As increase in number of investors and developers, there is property shortage in Mumbai, which results in increment of cost of land and property in Mumbai. With increase in population, the land requirement increases but not the land and property. So to fulfill these demands, developers and builders increases the rate of land and property. This increment affects the economy of the Mumbai and increment of overall cost on products as well as on land and property, which makes Mumbai expensive gradually.
Hi, Nice informative post. Thanks for sharing a deep insight on the trends of property in Mumbai.
Its time to again recession, still property price will be hike not only in Mumbai but also in the whole country. In Noida a New project has launched by Amrapali Group “Amrapali Hanging Gardens” the price of this project for 1BHK is Rs. 4100/sft. And we all now that Noida extension is facing controversy!
iParmar group is participating in 19th Real Estate & Housing Finance property exhibition 2011 held by Maharashtra Chamber of Housing Industry (MCHI) at Mumbai to promote their reputed project River Residency.
What is more important to make Mumbai a costlier place to live in Or Better place to live in?
Hi,
but you have not taken in account is trend in real estate market and precarious position of highly leveraged real estate developers like blog of http://www.realestatedealstreet.com does.