Mumbai’s real estate sector is currently confronting a major hurdle as the rates for Slum Transferable Development Rights (TDR) experience an unexpected surge. Over the past six months, areas like Mulund and Borivali have witnessed a sharp escalation in TDR rates, disrupting profit margins and throwing construction schedules into chaos for ongoing projects.
This sudden spike in TDR rates has caught developers off guard, with Mulund seeing an astonishing jump from ₹3,500 per square foot to ₹6,000, and Borivali experiencing a similar surge from ₹3,000 to ₹5,700 during the same period. The ripple effect of this unprecedented rise in TDR rates is felt across Mumbai’s real estate landscape, presenting formidable challenges for developers and stakeholders.
This surge couldn’t have come at a more challenging time for Mumbai’s real estate, already contending with heightened activity due to upcoming general and state elections, alongside stringent regulatory deadlines set by the Real Estate (Regulation and Development) Act (RERA). The resulting surge in TDR demand further compounds an already precarious situation, exerting immense pressure on developers to manage rising costs and meet project deadlines.
The implications of this surge are multifaceted. Soaring construction costs, coupled with project delays, are squeezing developers’ profit margins, raising concerns about the financial viability of ongoing projects. Each day brings the looming prospect of these escalating costs being transferred to homebuyers, exacerbating the affordability crisis in Mumbai’s housing market.
Despite the release of 30,000 square meters of fresh TDR into the market, there are currently no takers due to inflated rates. Developers are understandably cautious about purchasing TDR at double the previous rates, fearing it would not only eat into their profits but also jeopardize project feasibility.
In response to the volatile TDR market, developers are exploring alternative avenues to mitigate the need for TDR purchases. Options such as permanent transit camps and cluster development are gaining traction as viable alternatives to address the TDR crisis and ensure project continuity.
As the market grapples with a severe supply shortage, developers are urging the government to intervene by releasing more TDR into the market and rationalizing rates. Such proactive measures are crucial to restoring balance and stability to the real estate market, fostering sustainable growth, and creating a conducive environment for developers and homebuyers alike.
The volatility in the TDR market presents significant long-term challenges for Mumbai’s real estate sector. However, with proactive intervention and collaborative efforts between stakeholders and policymakers, the industry can navigate through these turbulent times and emerge stronger.