City and Industrial Development Corporation (CIDCO) land auctions in Navi Mumbai last week saw 40 percent lower bids than in November, hinting at a possible impact of Real Estate (Regulation and Development) Act (RERA).
The bids varied between Rs65,250 per sq and Rs96,000 per sq m in comparison to Rs 1.15lakh – Rs 1.25lakh in November. Land prices in Mumbai Metropolitan Region have started falling with RERA having limited developers’ ability to buy land with advance payments from customers, according to a report in The Financial Express.
As developers make payments to CIDCO through cheques, the possibility of demonetisation-driven plunge in bids is unlikely. Manohar Shroff, vice-president, MCHI, Navi Mumbai, told the media that RERA is the primary reason for the bids having come in at such low levels.
Industry experts expect the sector to see a lull period for another six months on account of RERA, lacklustre sales in April and May, and demonetisation spillover.
“A gradual improvement in buyer sentiment is expected towards the second half of 2017 as the impact of real estate reforms will begin to play out in the market,” says the latest report from Cushman & Wakefield.