The slow pace of registrations for ongoing projects in Maharashtra, under the newly instituted state RERA (Real Estate Regulatory Act), could delay the launch of some 5,000 new units in Mumbai.
The slow pace of registrations for ongoing projects in Maharashtra, under the newly instituted state RERA (Real Estate Regulatory Act), could delay the launch of some 5,000 new units in Mumbai. More than halfway through the three-month registration process, which concludes on July 31, a cursory inspection of the website reveals just about 35 projects have been listed. The pace of new launches, developers say, would depend on how soon builders become RERA-compliant. Registrations are, however, tipped to pick up pace after July 15.
Edelweiss believes a slowdown in sales in Mumbai and across India is imminent due to lack of project registrations and slackened new launches. If developers fail to register their projects on the RERA website before July, these cannot be advertised and sold.
Around three-fourths of the projects registered in Mumbai are in the suburbs; interestingly, not a single project in the main city, dominated by luxury projects, has been listed. Brokerage firm Edelweiss estimates there are more than 800 projects in various stages of construction.
Real estate developers in Maharashtra say, registrations have been abysmally low as the government continues to fine tuning the regulations. Niranjan Hiranandani, MD, Hiranandani Group said the slow pace could be attributed to nothing more than systemic problems. “The government continues to issue clarifications on several issues such as how carpet area is to be calculated. This is critical to the business and must be adhered to,” Hiranandani explained. Moreover, there are overlaps and conflicts with MOFA (Maharashtra Ownership Flats Act).
Rohit Gera, MD, Gera Developments pointed out that there were differences between RERA and MOFA with regard to the definition of a condominium. “Multiple clarifications take time,” Gera said. His firm believed it was prepared to the extent of 80%-85% for a filing but realised later it was not. Sales of apartments have recovered from the lows seen immediately after demonetization last November — property registrations in Mumbai hit a six year low. “Sales were affected until the end of February post which they have picked up, particularly in June,” Hiranandani. However, the current quarter will probably end with lower sales, according to Ashutosh Limaye, Head(Research) JLL India who expects volumes to come in about a fourth lower than in Q4FY17.
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The slow pace of RERA registrations has led to concerns about how much inventory can be readied for sale. “The priority is to get the ongoing projects to comply with the new regulations,” said Ashish Shah, COO at Mumbai based, Radius Developers.
Launches as the moment could be detrimental to business as core parameters like calculation of carpet area, columns, deck area that define saleability in major ways are changing, Shah added. Many of the larger players like Radius, Oberoi Realty, Sunteck and Lodha, except for Godrej Properties have shied away from new project launches after the RERA came into effect on May 1.