Maharashtra Govt MHADA Redevelopment Plans May Impact Inventory Overhang
According to Subhankar Mitra, Managing Director, Advisory Services (India), Colliers, redevelopment of MHADA colonies of Mumbai should be optimized for positivity in the micro-market
The Maharashtra government has cleared a proposal for the Redevelopment of MHADA (Maharashtra Housing & Area Development Authority) colonies at Motilal Nagar, Goregaon at Western Suburb of Mumbai. The said colony has about 5,300 tenements at present; post the redevelopment, there will be a whopping number of 33,000 new apartments that would hit the market.
Mumbai city had sold about 18,000 units in 2020 and about 23,000 units in 2019. The proposed supply is estimated to be about 1.5 times the annual absorption capacity of Mumbai city. Although this supply will come in a phased manner over 6-8 years, it will impact the inventory overhang for the western suburb market. It is also likely to create pressure on this micro market’s home prices, currently at INR 17,000 -19,000 per square foot.
However, there is some positive takeaway for the private sector. Since MHADA does not have enough bandwidth to undertake such a massive scale of redevelopment, they would also be open for private sector participation. In all, MAHDA needs to consider the impact it will create on the market by the sheer supply volume. Hence, it needs to optimize the development mix so that the ripple effect brings adjutant growth and positivity in the micro-market. Also, such projects offer opportunities for job creation.
MHADA has about 114 housing colonies across Mumbai. The success of the proposed redevelopment of Motilal Nagar will also bring hopes for other MAHDA colonies many of them have been worn-out due to aging and offers poor condition of living for its occupants.