Bangalore: Just as obtaining approvals for real estate projects in Mumbai was getting easier, a new hurdle has emerged: tougher environment clearance norms.
The ministry of environment and forests in January issued guidelines prescribing tougher scrutiny of violations of environmental norms by builders, and mandating them to secure environment clearances for their projects before they can begin construction.
This and a 2012 circular regulating the height of buildings based on road width are crippling the real estate project approval process in the Mumbai Metropolitan Region (MMR) that comprises Mumbai, Thane and Navi Mumbai.
While these norms apply nationally, Mumbai’s real estate market, India’s second largest and the costliest, will be most affected as it was only now beginning to recover from a long paucity of project approvals, say property analysts. The approval deadlock was because of a housing scam and some controversial schemes that were subsequently scrapped.
“There is huge backlog of projects waiting for approvals as a result of these two environment matters. Worse still, there have been several withdrawals by developers and rejections by the environment committee on these grounds, causing further delays,” said Deepak Goradia, vice-president, Maharashtra Chamber for Housing Industry-Confederation of Real Estate Developers Associations of India (MCHI-Credai).
The Maharashtra government in mid-2012 formed the state-level expert appraisal committee, or SEAC-2, to ensure speedy clearances for real estate projects in Mumbai, Thane and Navi Mumbai. The already existing SEAC continued to evaluate real estate, industrial and other projects in the rest of Maharashtra.
After obtaining clearances from the SEAC and SEAC-2, project proposals are sent to the State Level Environmental Impact Assessment Authority (SEIAA) for a final nod.
The new committee for MMR has sharply reduced the number of pending project approvals in MMR, said Maharashtra principal secretary, environment, Valsa R.Nair Singh,adding that the provision linking building height to road width will be relaxed.
“There were around 400 projects under SEAC-2 in December and since then the pendency has come down to 95 projects waiting in line. Projects are taken up for appraisal in two months time, which took far longer earlier,” Singh said by phone from Mumbai. “Outside MMR, the pendency is still quite long.”
MCHI-Credai members and individual developers argue that the drop in the number of pending project approvals in MMR was because several real estate firms withdrew their proposals following the new environment ministry guidelines. “There have also been many rejections of proposals by the committee based on green norms before being considered,” said a leading Mumbai developer, who didn’t want to be named.
According to MCHI-Credai, around 60 projects got final approvals from SEIAA between January and March, half of these in the MMR.
Pujit Aggarwal, managing director of Mumbai-based developer Orbit Corp. Ltd, said while the SEAC-2 has helped in getting approvals, the overall regulatory norms have created uncertainties for the real estate sector in Mumbai. “These two issues (tougher norms and linking building height to road width) have proved to be a huge impediment in the approval process,” he said.
Another developer, Lalit Kumar Jain, chairman and managing director of Kumar Urban Development Ltd, said project approvals in Mumbai are taking 18-24 months to come through. “I have three projects in Mumbai awaiting approvals for a year now, and five in Pune that are waiting for more than a year,” said Jain, also national president of Credai.
Real estate project launches in MMR dropped by 48% in January from a year earlier, PropEquity Analytics Pvt. Ltd said in a 22 March report. Property sales in the region fell 14% in January to 5,130 units; the biggest fall was in Thane on the outskirts of Mumbai, where sales declined 23%.
Om Ahuja, chief executive, residential, at Jones Lang LaSalle India, a property advisory, said a number of developers have been sitting on the fence for a while now waiting to launch projects that were planned long ago. “Launches are crucial and if adequate supply doesn’t come in, it creates an imbalance in property prices, which are a demand-supply play. Prices in Thane in recent months, for example, have gained 20-30%,” he said.