7 Reasons Why Mumbai's New TDR Policy Could Negatively Impact Real Estate Growth

The recent changes to Mumbai's TDR (Transferable Development Rights) policy could pose a significant challenge to the city’s booming real estate market. With developers now required to source a portion of their TDR from the Dharavi redevelopment project at increased rates, concerns are growing about the potential for higher property prices.

This policy shift may negatively impact buyer sentiment, resulting in a potential slowdown of the current real estate sales cycle. Discover the key reasons why this new policy could hinder Mumbai’s real estate growth below.

1. Mandated TDR Sourcing

The Maharashtra government’s mandate for developers to source 40% of their transferable development rights (TDR) from the Dharavi redevelopment project could strain the market. Developers will be required to acquire this TDR at 90% of the ready reckoner rates, impacting project budgets.

2. Increased Costs for Developers

With the new policy, developers may face increased costs to meet the mandated TDR requirements. As the cost of acquiring TDR increases, developers might pass these expenses onto homebuyers, leading to higher property prices.

3. Impact on Real Estate Sales Cycle

Experts warn that this new TDR policy has the potential to derail the current upward real estate sales cycle. If developers choose to hike prices to cover increased costs, it could dampen buyer interest, slowing down the momentum in the market.

4. Price Increases to Impact Homebuyers

The structural decision on TDR means approval costs will likely be passed on to homebuyers. This could lead to price hikes that may be higher than normal, further impacting affordability in the already expensive Mumbai real estate market.

5. Possible Market Sentiment Shift

There are concerns that this change in policy could lead to a negative shift in buyer sentiment. Buyers may hesitate to invest, fearing further price hikes, which could ultimately affect market buoyancy.

6. Potential Five-Year Slowdown

Experts have voiced concerns that this policy could trigger a long-term slowdown in Mumbai’s real estate market. A five-year slowdown is predicted if the policy leads to substantial price hikes and declining buyer interest.

7. Disturbance to current Real Estate Boom

While GST and RERA may not be issues that could derail the current real estate boom, this TDR policy has the potential to be a significant disruptor. Greed-driven price increases and statutory changes like this one could halt the ongoing growth in the market.