Mumbai may see land price correction

Land prices in some parts of Mumbai could see a correction of up to 25 per cent, if the new initiatives planned by the Maharashtra government to improve land supply in the city fructify.

 Repeal of the Urban Land Ceiling Act (ULCA), redevelopment of Dharavi, salt pan redevelopment and a new housing policy with incentives for rental housing and carpet area norms are among some of the new initiatives planned to increase the supply of land.

According to a study by international property consultant Knight Frank, the per-capita land availability for housing in Mumbai is 103 sq feet, which is one-tenth of international standards.

 The study pointed out that out of the 475.07 sq km land mass in Mumbai, only 120.55 sq km is available for housing, which forms 25. 26 per cent of the total.

 The first signs of a slow down in prices have already emerged after redevelopment of Dharavi was announced.

 With this project, expected to cost Rs 9,300 crore (Rs 93 billion), the government aims to develop 14 million sq feet of commercial space and 30 million sq feet of residential space in the next seven years.

 The industry experts believe that once developed, the area could have a cooling effect on the surrounding areas including the Bandra-Kurla Complex, Sion, Bandra, Khar and Santacruz.

 According to Knight Frank chairman, Pranay Vakil, the mere announcement of Dharavi redevelopment itself would have a salutary effect on the sobering of prices. "You would see the impact on prices in 7-8 days. Even in Bandra Kurla Complex (BKC), where prices go up to as high as Rs 30,000 per sq ft the prices could slump to Rs 7,000 per sq ft"

 The next major factor, which could contribute to land supply is repeal of Urban Land Ceiling and Regulation Act (ULCRA) in the monsoon session of

the legislature. Mumbai along with its suburbs could see around 25,000 acres of land being freed up for development.

 Industry analysts expect a 25 per cent-30 per cent price correction when this kind of land supply hits the market. "If this happens, there will be a slowdown in property prices. Since there is acute shortage of land, developers will benefit," says Rajesh Mehta, chairman, Raha Realtors.

Salt pan land redevelopment is also expected to free up 5,500 acres of land in the island city and could see a correction of up to 15 per cent-20 per cent in surrounding areas. Salt pan land exists in Vikhroli, Kanjurmarg, Trombay, Bhandup etc.

 Maharashtra Chamber of Housing Industry president Mohan Deshmukh believes that the measures could yield the results in two years time. "Today not much land is available for developers due to multiple approvals, ULCRA, salt pans, Rent Control Act and so on. The crucial factor is that you can not increase the land but the demand for it is growing."

He added that the government should increase the land supply by repealing the ULCRA and amending the Rent Control Act."

 If the state government announces amendments to the housing policy with incentives for rental housing and carpet area norms, nearly 100,000 housing units could be freed up and 500,000 people could get housing.

 "If the government amends the Rent Control Act, people will come forward to give their houses on rent; it could lessen the demand for housing and indirectly have an impact on spiralling prices," said Deshmukh.

 Though the Confederation of Real Estate Developers' Associations of India president RS Ajmera denies any major correction in prices across the city, he believes that in the areas where supply is released, prices could correct.