Real Estate Mumbai in India: Growth and Development

Real estate in Mumbai has undergone a massive transformation. Earlier the requirement for a home in Mumbai was minimal, with the joint family system. It was only when the population and the education levels went up, along with salaries that people began buying a house for themselves. Tolerance levels for others, including family, went down and the MOFA laws, which made things easy for the flat owners, encouraged home buying.

Even though getting a loan was not easy earlier, it became appreciably simpler around the '80s." Doshi points out that now many people are well onto their third or fourth home, others who don't have the money are not shy of taking up almost crippling loans to pay off a home purchase. It is now de rigueur to own a home and the poor unfortunate who has not so far had the foresight to buy one is eyed with both suspicion and pity!

There has been a sea change during this period within the supply and demand of realty. The most significant change has been in terms of attitude. Cost is no longer a defining factor, also as the units being bought are in-creasing, the size is decreasing. The fact that people can now get a loan of up to 3 or 4 times the salary they draw has fuelled demand tremendously Tax rebates on a loan is the other driver.

With these changes developers are offering a wide choice in every segment, making people think about what they want to buy - farmhouses, villas, plots, flats, penthouses, amenities and more.

On the supply side, real estate is now seen as a real growth sector and investors are eager, with the possible rate of return touching up to 20 to 25%. However the sector saw very diffi-cult times in the first forty years. Policies were vague and overlapping,which brought up many disputable cases that went into litigation for years, throwing development into jeopardy. It is only since the last 8-10 years, with increasing corporatisation of real estate companies, in-volvement of experienced architects, engineers and other consultants that things have changed.

Tracing the policy changes that have now become imperative to help this most promising sector, Pranay Vakil, Chairman, Knight Frank India, recounts the different stages of evolution, going back to the days of World War II, when empty flats were requisitioned by the Navy! People who had the land built and rented out homes, but there were few takers till the amendment to the Rent Control Act in the late '50s, which provided some protection to the tenants and rents were frozen. This eventually gave rise to thepugree system. Where the pugree became legalised was when the transfer of tenancy became a part of the capital gains process and the outgoing tenant actually got two-third of the amount and the landlord one third.
It was after this that the Cooperative Society Act was passed, where a saving on Stamp Duty was ensured. This continued till 1983 with minimal

or no stamp duty payable. To halt the number of undervalued transactions (with a huge cash component), the amendment to the Income Tax act -the 37-1 was passed to say that the Government could acquire any property at the documented level! This some-what took care of the illegal transactions doing the rounds. This also laid the groundwork for evaluation of a property as a whole department was set up with guidelines on what was carpet area, built up area and the other classifications!

However these continued to create obstacles in the growth path of the sector.Bodies like MCHI, CREDAI, BAI and others came into existence in early '80s, but became effective in the '90s. They are now work-ing closely with the government to change various outdated rules."

From here the sector is poised to grow even further. More housing stock would be generated in coming years for more segments. MCHI's 'Homes for All' programme will make room for all sections of society.

In the meantime Vakil advises buyers to consult a lawyer who is conversant with the area and the local law; this is the most important lesson to be learnt when looking back