Maharashtra’s Political Shift and Mumbai’s Real Estate Future

BJP-led Mahayuti alliance's sweeping victory in Maharashtra has buoyed realtors' hopes for policy reforms in Mumbai's real estate sector. Industry veterans and stakeholders are already making suggestions of radical reforms that would help address the perennial issues of housing-affordability, slum development and infrastructure growth that Indian cities face in the new government. But how might this political turn impact Mumbai’s real estate?

Affordable Housing: Tackling the Core Issue  

Affordable housing has long been a burning issue in Mumbai, its skyrocketing property prices leaving many unable to buy houses. Chairman & Managing Director, Keystone Realtors, Boman Rustom Irani said three critical reforms he believes can be taken that could go a long way in addressing this pressing concern are:

1. Reviving Rental Housing Schemes  

Irani advocated for the government to adopt a rental housing model, where public housing is built by the government and operated by private enterprises.  

> “Around the world, cities develop on the back of good housing created by the government and run by private enterprises on a rental model. This is very possible for Mumbai,” Irani said.  

Such a model could provide affordable housing options for the city's growing population while ensuring sustainable management of housing stock.  

2. Incentivising Peripheral Development  

Navi Mumbai, Vasai, and Dombivli are rapidly developing due to better connectivity, with metro expansion and ilk among various infrastructure projects. Irani suggested mechanisms like lower stamp duties and tax exemptions for developers functioning in these peripheral areas, promoting low-cost housing initiatives and easing demand on the city’s main zones.  

3. Rationalising Taxes on Housing

Currently, taxes account for up to 32% of a property’s value in Mumbai, significantly inflating costs for buyers. Rationalising these taxes could bring down home prices, making housing more accessible to the middle and lower-income segments.  

Slum Redevelopment: Transforming Mumbai’s Urban Landscape  

The city’s massive slum population presents a special challenge and opportunity for Mumbai’s real estate market. The BJP government’s pledge to make Mumbai “slum-free” could exponentially increase opportunities for them to build redevelopment projects. 

- Land Utilisation: Slum redevelopment frees up valuable land in prime urban areas, allowing for the creation of modern housing projects.  

- Social Impact: Improved living conditions for slum residents lead to better economic opportunities and quality of life.  

> “Redevelopment space holds immense potential for addressing Mumbai’s housing crisis,” Irani remarked, underscoring the importance of clear policies and efficient execution in slum redevelopment initiatives.  

Commercial Real Estate: The New Investment Hotspot  

hey know that the commercial real estate industry in cities like Mumbai and Pune continues to be a strong investment option for them even as the residential real estate segment struggles with high levels of price inflation in the mid-to-upper housing segments.

Why Commercial Real Estate?  

Gulam Zia, Senior Executive Director at Knight Frank India, recommended a shift in focus to commercial real estate, citing:  

- Steady Demand: The growing need for office spaces driven by corporate expansion.  

- High Returns: Strong rental yields as well as long term growth potential of commercial properties, attract more and more investors.

- Infrastructure Impact: The establishment of connections through projects such as the Mumbai Trans Harbour Link and metro extensions contribute to the availability of commercial areas and increase their worth. 

Infrastructure Development: A Catalyst experts foresee reforms in Mumbai real estate, for Growth  

Infrastructure projects have a huge role to play in the real estate dynamics of a city like Mumbai. With the BJP government’s focus on infrastructure and realty developmentacts as a catalyst for growth of various real estate segments.  

Key Projects Driving Growth:  

1. Mumbai Trans Harbour Link (MTHL): The project, which connects Mumbai to Navimumbai, decreases the travel time, unlocking new real estate opportunities in peripheral locations.  

2. Coastal Road Project: This project increases the property rates in the surrounding areas as it improves underground connections throughout Mumbai.

3. Metro Expansions: The expanding metro network makes it easier to get to suburban areas, thus increasing demand for residential and commercial spaces.

These projects not only increase property values but also enhance the livability of the city, attracting both buyers and investors.  

Industrial Revival and Economic Growth 

Gulam Zia highlighted the potential for Maharashtra to regain its industrial focus under the new government. A renewed emphasis on industrial development could lead to:  

- Job Creation: Increased employment opportunities in manufacturing and allied sectors.  

- Urban Migration: A higher influx of workers, boosting demand for affordable housing.  

- Economic Multiplier Effect: Industrial growth stimulates ancillary industries, including real estate.  

Challenges to Overcome

Despite the optimism, the real estate sector faces several challenges that need immediate attention:  

1. Approval Delays: Streamlining regulatory processes is crucial to accelerating project timelines and meeting housing demand.  

2. Affordability Gap: Bridging the gap between rising property prices and stagnant incomes requires innovative policy measures.  

3. Sustainability: Promoting eco-friendly construction practices and green buildings is essential for long-term urban development.  

The Road Ahead for Mumbai’s Real Estate  

Core issues like affordability, redevelopment and infrastructure must be addressed by the BJP-led government to bring transformative changes in the Mumbai real estate. As long as it puts the right policies in place and follows through on timely execution, there is every reason to believe the city can maintain a balanced and equitable growth trajectory.

This is an important time for prospective homebuyers to evaluate market opportunities and make a sound investment. From a developer perspective, the emphasis should be placed on ensuring that projects are aligned with new government priorities to take advantage of potential growth areas.

With the new transitional momentum in Mumbai, the real estate sector is very promising for all stakeholders.