Piramal Realty, one of the reputed developers in India, has decided to develop residential projects in the Mumbai Metropolitan region over the next 3 years. According to an official of the group, they are planning to make an investment of over INR 3500 crore to build homes under this initiative. Of this INR 3500 crore, INR 1500 crore will be spent to develop a 5-acre estate as part of Piramal Realty Vaikunth, a township project launched by the group.
In this 5-acre project, the company will be focusing on the compact housing sector, offering 1 BHK and 1.5 BHK apartments. According to their executive director, luxury homes would have done well too, but at the moment compact homes have a high demand in Mumbai. It is to be noted that this is a wise decision considering the growing inventory of unsold luxury homes. With the real estate sector facing a liquidity crisis and lack of funds, several luxury properties in Mumbai have stalled midway. A large number of flats lying unsold, especially in high-end projects. This is primarily a result of a decrease in the purchasing power of the buyers due to various reasons, including the unavailability of bank loans.
Apart from this project, the group will also undertake 3 projects by July this year to develop compact homes. These would be developed in Byculla, where development by Piramal Vaikunth already exists, Thane and Mahim. The builder has previously developed several successful projects in South Mumbai, with the ones ay Byculla and Mahalaxmi being the most popular. Right now the company has around 17 million Sq.Ft. of ongoing projects, which they hope to increase to 27 million Sq.Ft. by 2020. Piramal Realty has already joined a joint realty with well-known builder Omkar Realtors and developers to develop a 4-acre project in Mahim area.
The real estate sector in this city has been facing a slump for the last few years due to a number of reforms and taxes introduced by the government. The introduction of GST, demonetization and other taxing laws has resulted in a fall in sales of homes. With the number of unsold units growing, the banks stopped funding real estate projects and giving home loans. The lack of funds has put the developers in a tough situation, forcing them to stall the projects.
However, Piramal Realty seems to be doing quite well compared to the general situation. Compared to a year ago, the number of ongoing projects increased by 50% during the first 9 months of 2019. In the first three quarters of the financial year 2019 to 2020, Piramal Realty recorded sales worth INR 1250 crore, of which 450 crore was during the 3rd quarter. According to the executive director of the company, landlords have already approached them for joint development or sale. A number of lenders have also reached out to the developer to help complete the projects.
The initiative to develop property in Mumbai offering compact homes is expected to help the company maintain its stronghold over the real estate sector here.
