The Mumbai Metropolitan Region (MMR) remains a magnet for real estate investment, offering a range of opportunities particularly in its peripheral areas. Despite the allure of lower prices and new developments, there are significant pitfalls that prospective buyers must navigate.
Delayed projects - a common snag: A prevalent issue in MMR’s real estate market is project delays. Data from the Real Estate Management Institute (REMI) indicates that over 30% of regional residential projects are delayed past their expected completion dates. These delays can financially strain buyers, forcing them to bear the dual burden of rent and EMI payments without a definitive possession date.
Construction halts - a warning sign: The abrupt cessation of construction activities is a major red flag, often due to funding shortages, legal disputes, or bureaucratic delays in obtaining necessary permits. Reports show an 18% increase in construction halts in 2023, especially in less developed areas. Buyers should approach projects with lengthy inactivity periods with caution.
Quality of construction - essential for monsoon climates: In areas prone to heavy monsoons like MMR, the quality of construction is crucial. Inferior construction can lead to significant issues such as water seepage and structural damage. Prospective buyers should assess the developer's construction quality by reviewing other completed projects and checking for signs of damage or premature aging.
New developments in the outskirts are especially vulnerable to monsoon impacts like flooding and waterlogging, often exacerbated by inadequate infrastructure. A lack of effective drainage systems can pose significant risks during the rainy season, making thorough site evaluations essential.
Evaluating developer credibility: The builder's track record is critical in mitigating investment risks. To gauge reliability, buyers should research the developer’s history, including past projects and any legal issues. Engaging with registered developers listed by credible organisations can provide additional reassurance.
Promised versus actual infrastructure: Buyers should be sceptical of promises regarding future amenities and connectivity. Over 60% of buyers report feeling misled by promises of infrastructure developments that are far from fruition, according to the Real Estate Future Trends Report of 2024.
Regulatory safeguards: Verifying a property’s RERA compliance is essential for legal safeguards against delays and misrepresentation.
The importance of due diligence: Thorough due diligence is indispensable. This includes verifying land titles, assessing construction progress, and consulting existing buyers. Hiring independent auditors to evaluate structural integrity and material quality can prevent future liabilities.
In conclusion, while MMR’s peripheral real estate market presents attractive investment opportunities, they come with notable challenges. Awareness of these red flags and proactive research can safeguard against potential financial losses, turning an investment into a secure and rewarding venture.
(The author is Partner, Palladian Partners Advisory Pvt Ltd.)
