Will The Rollback Of Draft Mumbai Development Plan 2034 Affect Buyer Sentiment?

It does not happen very often that a plan to develop a city is hit by thousands of objections and criticisms like the Development Plan 2034. The plan had many progressive procedures including the much-appreciated higher FSI for residential properties, which facilitates more development on a land parcel. However, as many as 50,000 official objections were raised against Chief Minister Devendra Phadnis's first important project since he took charge in Maharashtra. Taking into account the objections, the chief minister has now ordered rework on the draft development plan, bringing it back to the drawing board.

The errors
Glaring errors in the land earmarked for use in development were cited by the real estate experts. The Municipal Corporation of Greater (MCGM) has now been asked to correct the errors in the draft policy. It was observed that the draft did not allocate space for public utilities and also did not consider the heritage structures while allotting land for development in Mumbai.

The falling buyer sentiment
The delay that the rework on the draft will cause, is expected to affect the possible spurt in demand from the buyers, which has been sluggish for long now. The plan also demonstrated that Mumbai's real estate purchases will remain dull for a much longer time until the government comes up with a concrete plan. The state government has asked the municipal authority to revise the draft within four months. However, this process could take much longer than expected.

Unsold inventory to remain unsold
There has been a considerable downfall in the buyer sentiment after the draft was moved to the ice box. Mumbai already has a large supply of unsold inventory due to the wait-and-watch policy of buyers aided by high interest rates and less hope of property depreciation. Mumbai currently has the second highest unsold inventory at over 6.8 lakh units, including the ones in the suburbs of Thane and Navi Mumbai.

New project launches halted
Even without the setback from the state government, the new project launches have already been on a standstill. Last year, new project launches in Mumbai fell by 40 per cent in the main city, while it went down by 58 per cent in Navi Mumbai and by 62 per cent in the central suburbs of Thane. The drop has been due to the uncertainty on policies regarding floor space index (FSI) and land allocation for development. Developers are waiting for the new policies and their implications on future projects and also for the sale of unsold inventory before they launch new projects.

To sum it up, the rollback has not only affected the buyer sentiment but has also in turn affected the sales of the unsold inventory in the market.

(Katya Naidu has been working as a business journalist for the last nine years, and has covered beats across banking, pharma, healthcare, telecom, technology, power, infrastructure, shipping and commodities)