Mumbai's Housing Market Faces Slowdown, Developers Consider Halting New Projects
The Mumbai property market appears poised for a lull in emerging housing developments as its performance falters and market forces exert pressure. Sources reveal that prominent Mumbai developers recently convened to discuss the potential suspension of new residential projects in light of the ongoing slowdown.
"New projects are not viable, sales are slow and buyers are sitting on the fence. Every developer is looking at his own cash flow and many projects have slowed down. Each one is wise enough to take a call on what to do," stated Mufatraj Munot of Kalpataru, a veteran builder and former president of the Maharashtra chamber of housing industry. However, Munot refuted claims of a collective developer decision to halt new project initiations.
Stagnant Sales and Financial Pressures Impact Construction Industry
The sustained stagnation in sales continues to intensify challenges within the construction industry. "Builders are deferring launching of new projects. With banks and financial institutions turning the screws, the real estate market has dried up. There are no investors and the actual users are waiting for prices to come down," commented an anonymous property developer.
Faced with these mounting difficulties, numerous builders have initiated workforce reductions. Reports indicate that a well-known developer, recognized for signature buildings, recently reduced their employee count by approximately half, from 450.
TDR Market Loses Luster, Payment Issues Emerge
Even the previously profitable Transfer of Development Rights (TDR) market has experienced a downturn. The price of slum TDR, which was approximately Rs 4,000 per square foot six months prior, has now plummeted to Rs 1,200 per square foot, yet demand remains low. Additionally, builders are facing difficulties in fulfilling payments to TDR sellers. It's estimated that around 100 builders have outstanding payments of nearly Rs 200 crore to TDR owners and traders.
Builders Offer Undisclosed Discounts Amidst Market Challenges
While official property price reductions remain unseen, builders are discreetly engaging in negotiations with individual flat buyers and offering concessions to those buying in bulk. Illustratively, a developer in Bhandup recently successfully concluded the sale of six flats by reducing the price from Rs 7,500 to Rs 4,200 per square foot. Similarly, another developer in Goregaon extended similar price reductions to six buyers.