910 housing societies being redeveloped: Report

Most of these new homes, that is, 32,354, will be built in the western suburbs, followed by 10,422 in the eastern suburbs, 1,085 in Central Mumbai, and 416 in South Mumbai

MUMBAI: By 2030, Mumbai will have 44,277 new homes, added through 910 housing societies currently in different stages of redevelopment. This was revealed in Upgrading Mumbai – The Redevelopment Story, a report released by international property consultant Knight Frank.

Mumbai, India - August 01, 2022: The controversial Patra Chawl redevelopment under construction site at Siddharth Nagar, at Goregaon, in Mumbai, India, on Monday, August 01, 2022. (Photo by Vijay Bate/HT Photo) (HT PHOTO)

Most of these new homes, that is, 32,354, will be built in the western suburbs, followed by 10,422 in the eastern suburbs, 1,085 in Central Mumbai, and 416 in South Mumbai. The total estimated market value is pegged at ₹1,30,500 crore, covering 326.8 acres within the greater Mumbai limits.

The report, which explores how Mumbai is being reshaped by renewing ageing housing stock, notes that an estimated 1.60 lakh housing societies were aged 30 years and eligible for redevelopment.

The data excludes the redevelopment of slum colonies, through the Maharashtra Housing and Area Development Authority (MHADA) and self-redevelopment projects.

In the next five years, the state is estimated to earn ₹7,830 crore in revenue from stamp duty from the sale of these homes, and ₹6,525 crore in Goods and Services Tax, according to Shishir Baijal, chairperson and managing director of Knight Frank India.

More than 80%, or 754 registered agreements of housing societies since 2020 were for plots below 0.49 acres, highlighting the operational challenges of land aggregation in dense city precincts. During the same period, only nine societies on 2.47 acres opted for redevelopment.

Once the new homes in these housing societies are complete, they will account for 14-15% of the new inventory that will enter Mumbai’s realty market. The lion’s share will continue to come from slum rehabilitation projects.

“Our assessment suggests that in markets below ₹40,000 per sq ft price, developers should not share over 30-35% of the total area with society members. This may increase to 35-40%, where prices range between ₹40,000 and ₹60,000 per sq ft, and up to 50% in locations priced over ₹75,000 per sq ft. Beyond these thresholds, cash flows lose flexibility and projects become vulnerable. Prices of anything below ₹40,000 per sq ft have limited margins,” said Gulam Zia, senior executive director, research, advisory (Infrastructure and valuation), Knight Frank India.

The report added that the average project timelines extend from 8 to 11 years, that is from initial thought to the completion stage.

While presenting the report, the consultant pointed out that it is a myth that the spike in redevelopment projects in Mumbai is heating up the property rental market, as demand from the affected families accounts for only 8% of demand in this section of the market.