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As Cidco plot rates slide, Mumbai builders turn cautious about buying land

Plots in Navi Mumbai are selling at ₹1.33 lakh per square metre as opposed to ₹2.92 lakh per square metre three years ago

mumbai Updated: Jun 21, 2018 00:26 IST
Naresh Kamath
Naresh Kamath
Hindustan Times
Mumbai real estate,Mumbai realty,Cidco
For years, builders purchased land at exorbitant prices for Cidco plots resulting in speculative realty market.(HT Photo)

With the real estate market still coming to terms with the slowdown in its sector, builders have become all the more cautious when purchasing plots of land in the city.

On Wednesday, the City and Industrial Development Corporation (Cidco) sold a 3.3-acre plot at Nerul in Navi Mumbai for ₹181 crore, at the rate of ₹1.33 lakh per square metre. Three years ago, a similar Cidco plot was sold at the rate of ₹2.92 lakh per square metre, as builders quoted exorbitant rates to bag it.

The 3.3-acre plot located in Sector 19 A, adjacent to Wonder Park, at Nerul was bought by Moreshwar Builders and Developers — one of the major builders in Navi Mumbai.

Admitting that prices were lower compared with past auctions, Mohan Ninawe, senior public relations officer (PRO) for Cidco said the response was tepid. “There are market forces at play and this determines the prices,” said Ninawe.

Manohar Shroff, vice-president of the Maharashtra Chambers of Housing Industry (MCHI-Credai) calls such low pricing of land as a boon for homebuyers.

“Since land is the major cost in any real estate project, any decrease will ultimately benefit the consumers,” said Shroff.

Suresh Chanchladas, the owner of Chanchaldas and Sons, a leading builder in Navi Mumbai, expressed a similar opinion. He said that such reasonable rates are inevitable to ensure sanity in the market. “High and exorbitant rates disrupt the entire real estate market, resulting in a decrease in sales due to unaffordability,” Chanchaldas said.

For years, builders purchased land at exorbitant prices for Cidco plots resulting in speculative realty market. They were supported by investors who funded such high costs.

However, the slowdown, as well as the Maharashtra Real Estate Regulatory Authority’s (MahaRERA) stringent rules, resulted in investors quitting the market and also promoted transparency in the sector.

In January this year, HT reported that Cidco’s sale of 13 plots in Navi Mumbai fetched it ₹323 crore, signalling that the real estate market was slowly gaining strength. Even then, the MCHI-Credai felt that the prices quoted by Cidco were way too high and many of the plots were riddled with encroachments.

First Published: Jun 21, 2018 00:26 IST