Mumbai real estate: Boom and bust at the same time

MUMBAI: A recent wave of building collapses has brought attention to this city’s large number of poorly built structures. It feels as if every week brings fresh reports of a new disaster. The death toll is expected to rise with the monsoons.

News media and political attention have mostly focused on the vast stock of old buildings from the pre-independence period and immediately after. Yet old age wasn’t the cause of the collapse of a building in Thane, a city on the outskirts of Mumbai, that killed around 74 people in April. That building was still under construction. (And, like a majority of buildings in Thane, the construction was illegal – neither authorized nor overseen by any official agency.) Old age cannot explain the caving in of a 34-year-old building that killed at least 10 people near here last month either, nor the collapse of a building, about a decade old, that killed at least six people and injured more than two dozen last week.

Intangible factors, like faulty urban policies and unchecked real-estate speculation, bear the prime responsibility.

Most of the recent casualties have taken place in the far periphery of Mumbai, where one finds a sprawling landscape of hastily built residential blocks meant to absorb white-collar middle-class Mumbaikars who struggle to find anything even remotely affordable in the city. Many of them commute for hours daily in trains so packed that people routinely fall out – collateral damage of the speculative euphoria.

A bombastic real estate sector has simultaneously pushed up the price and heights of buildings, accelerated the speed of construction and lowered the quality of new structures in and around Mumbai. Many properties are conceived primarily as assets, to be bought and sold to investors. Owners often prefer empty flats because they can be traded more easily. This partly explains why, according to a government census in 2011, nearly half a million houses and flats are vacant in one of the most crowded metropolitan areas on earth.

Officially, the promotion of a vertical skyline has been justified on the grounds that high-rise structures are the only possible response to Mumbai’s huge population and land shortage. Dozens of skyscrapers, 300 feet high or higher, are under construction in Mumbai. Investors are planning to build, at around 2,300 feet, the world’s second tallest structure.

But the argument for verticalization has long been rejected by architects and city planners. Every vertical push also requires a horizontal spread – new high-rise inhabitants need access roads, open space and other services. Besides, the higher you build, the more expensive the construction and maintenance.

High-rise structures are also outside the budget of India’s low-income groups, which explains why, in the last decade, south Mumbai has seen both more high-rise buildings and a declining population.

Following the same faulty logic, the authorities are promoting the transformation of slums, which can be found in all parts of the city and where over 60 percent of the population is said to be living. Since the 1990s, the Slum Rehabilitation Authority has offered to let investors raze slums and redevelop the land, so long as they devote part of the site to new housing for the displaced residents.

Inevitably, that housing is squeezed into high-rises, in order to leave as much land open for development as possible. These structures are often shoddily built disasters. Maintenance is expensive, and rust, leaking roofs and cracked walls are common after only a few years. In addition, the buildings are not amenable to the kind of home-based economic activities and street retailing that characterized the old neighborhoods. Eventually, many sell and move out to a slum.

Source: The Economic Times

Realty regulatory bill to be introduced in Monsoon session

NEW DELHI: The real estate regulatory bill that seeks to bring transparency and accountability in the realty sector will be introduced in the monsoon session of Parliament, a top government official said today.

Last month, the Cabinet had approved the Real Estate (Regulation and Development) Bill, that seeks to provide a uniform regulatory environment to the sector.

“The Bill will be introduced in the Monsoon session of Parliament,” Housing and Urban Poverty Alleviation Secretary Arun Kumar Misra said at an annual convention of National Association of Realtors (NAR) India.

The Bill will be sent to Parliamentary Standing Committee for consideration and suggestions, Misra said.

The month-long Monsoon session of Parliament is expected to start in late July.

Misra also disagreed with developers’ contention that prices would rise by 30 per cent once this Bill is passed in the Parliament.

“All that the regulatory Bill says that when you start selling the flats, all the licenses and permissions should be in place,” the secretary said.

Stating that the Bill deals with property brokers and agents as well, Misra assured the brokers’ body NAR that they would be included in the list of associations to be consulted by the Standing Committee. He asked the brokers to bring more professionalism in their business.

NAREDCO, an industry body of real estate developers, President Naveen Raheja emphasised on the need of self- regulation.

NAR-India is an industry body for property brokers and it has 1,700 members. They are affiliated to the national association of realtors (NAR), a global association based in Chicago, USA.

The Bill provides for setting up a regulator for the real estate sector and has provisions like a jail term of up to three years for developers who make offences like putting up misleading advertisements about projects repeatedly.

It also intends to make it mandatory for developers to launch projects only after acquiring all statutory clearances from relevant authorities. The Bill makes it mandatory for builders to clarify the carpet area of the flat.

Source: The Economic Times

Adding more districts in NCR to increase land supply: CREDAI

NEW DELHI: Hailing the inclusion of three more districts in the National Capital Region, realtors’ apex body CREDAI today said the move will lead to additional supply of land for development.

It cautioned however that the government prepare a master plan for development of the region or else builders will start accumulating land, leading to rise in prices.

The property consultant said there would not be any immediate impact on the property market of NCR.

Yesterday, the National Capital Region Planning Board (NCRPB) included Bhiwani and Mahendragarh districts of Haryana and Bharatpur in Rajasthan in NCR.

“It is a futuristic decision with vast ramifications for NCR region. Reports foresee almost 11 per cent increase in urbanisation of this area by 2021 and to reduce the pressure on Delhi, there was urgent need to expand the area,” CREDAI NCR President Anil Sharma said in a statement.

Stating that land is in short supply, Sharma said it was essential to expand the area to meet the future housing needs.

But, he cautioned that merely adding these areas to NCR will not serve the purpose unless infrastructure is developed in a rapid and planned manner.

“The decision should be followed up with preparation and implementation of Master Plan as soon as possible otherwise builders will start accumulating land, leading to speculative price rise,” he added.

Jones Lang LaSalle India CEO (Operations) Santosh Kumar said: “Its a long term decision. There would be no immediate impact of this on the NCR property market.

“More land parcel will come in the NCR. These districts would get central funds for infrastructure development. The connectivity of this region to the national capital will improve.”

The consultant noted that builders might start buying land, but it is unlikely that project would be launched in this region.

Source: The Economic Times