Realty stocks rallied up to 10 percent after almost three years, the Mumbai Development Plan 2034 has finally received approval. Strong Indiabulls Real Estate earnings also boosted sentiment.
Mumbai-based realty companies like Indiabulls Real Estate shares jumped up to 9 percent and DB Realty rose 4 percent (on top of 13.5 percent upside in previous session) while Sobha and Phoenix Mills gained more than 1 percent. Godrej Properties, Peninsula Land & Mahindra Life were off day’s high and Oberoi Realty fell more than 1 percent after digesting the news.
new Mumbai development plan opens up 3,700 hectares of land that was earlier designated as no-development zone for construction of residential real estate, especially affordable housing and commercial complexes in the city. As many as 2,100 hectares will be be released for affordable housing under the Plan.
While experts have termed it as a great positive for affordable housing development in the city, others have warned that if infrastructure development does not keep pace with increased construction, the stress on civic amenities and traffic may worsen in the city.
The document will determine the city’s land use pattern for the next 20 years. MDP 2034 is likely to spur real estate activity in the city and also pave the way for the development of much-needed affordable houses in the Maximum City.
MDP 2034 proposes to unlock 3,700 hectares of public and private land currently tagged as NDZ – this massive land unlocking will open new avenues for real estate development.
It sets a target to construct 10 lakh affordable homes through unlocking of NDZ. This will prove to be a major push for the affordable housing segment, and much needed to accommodate the ever increasing population in the city. It is perhaps the largest addition to the city’s developable land banks in recent history.
Ramesh Nair, CEO and Country Head, JLL India is of the opinion that the new DP “creates a massive opportunity for affordable housing projects and ensures a fine balance between environment and development. The land earlier earmarked as salt pans have been opened up for housing, while no further construction is allowed in the Aarey Colony apart from the approved construction of metro car shed. We see great promise in this plan as it is supported by a robust financial outlay laid out by the BMC for on ground implementation.”
“The creation of open space of 120 hectares at Eastern Waterfront through PPP is in line with improving the per capita open space ratio of Mumbai. This opens Mumbai’s trademark waterfront for development of recreation, retail and entertainment projects and will give rise to re-development of real estate along the corridor, much like what Canary Wharf re-development did for London’s office district,” he added.
The plan has increased the floor space index (FSI), or the extent of construction allowed on a piece of land, for both commercial and residential buildings. In the island city, the FSI has been increased from 1.33 to 3 and 5 for residential and commercial properties, respectively. In the suburbs, it has been increased from 2 to 2.5 for residential properties and from 2.5 to 5 for commercial properties.
Sumit Bilgaiyan, Founder of Equity99 said he is bullish on Oberoi Realty and Godrej Properties with target price of Rs 685 and Rs 950 respectively.
Meanwhile, Indiabulls Real Estate reported a nearly 21-fold jump in consolidated net profit for the quarter ended March. Its net profit stood for the quarter at Rs 1,648.3 crore, as against Rs 79.8 crore in the year-ago period, the Mumbai-based developer said in a filing to BSE.moneycontrol