Mumbai’s real estate landscape is poised for a major transformation as the Maharashtra Housing and Area Development Authority (Mhada) initiates structural audits of over 13,000 cessed buildings, opening the doors for widespread redevelopment across the city. Real estate experts predict that this strategic move will significantly boost housing demand and drive sustainable growth in India’s largest property market over the next few years.
The cessed buildings, which were constructed before September 1969 and are subject to Mhada’s repair cess, are among the city’s oldest and most dilapidated structures. To assess their redevelopment potential, Mhada has appointed structural consultants and issued notices for properties falling under the Mumbai Building Repair and Reconstruction Board (MBRRB).
According to Mhada, the audit process will strengthen administration, ensure timely redevelopment, and improve living conditions for thousands of residents living in these unsafe structures. The authority has already audited 171 such buildings and received structural reports for 32 of them.
Huge Opportunity for Developers
Redeveloping cessed buildings presents a Rs 30,000 crore market opportunity, according to industry estimates. Developers are closely tracking the audit results, with many preparing to collaborate with stakeholders to align projects with local regulations and community needs.
“These ageing structures hold great potential,” said Siddharth Vasudevan Moorthy, Managing Director of Vascon Engineers. “Developers need to stay updated on Mhada’s findings and position themselves for upcoming redevelopment opportunities.”
Additional Land Supply from Slum Clusters and Chawls
Beyond the cessed buildings, large-scale redevelopment projects are also underway in Dharavi slum clusters and the British-era BDD chawls of Central Mumbai. These projects will not only rehouse existing residents but will also free up land for the construction of saleable apartments, generating additional supply in the residential market.
However, as open land in Mumbai is scarce, industry experts agree that this wave of redevelopment will not create an oversupply. “The new supply is unlikely to cause a glut, especially in premium markets like South Mumbai and Bandra where demand remains consistently strong,” said Shveta Jain, MD, Residential Business, Savills India.
Stable Prices Amid Strong Demand
Despite the influx of redeveloped units in the coming years, real estate professionals do not anticipate a sharp correction in residential prices. In 2024, Mumbai witnessed an 11% year-on-year increase in home sales, with 96,187 units sold, and average property prices rose by 5% to ₹8,277 per sq ft.
“The vacancy rate for ready-to-move-in homes remains below 5%, indicating strong absorption capacity,” said Anand Moorthy, Co-founder, Square Yards. “This suggests that even with increased supply, the market will remain stable.”
According to Swapnil Anil of Colliers India, “If supply exceeds demand, prices in the affordable and mid-market segments may soften slightly. But in premium locations, a major price correction is unlikely due to consistent demand and limited land availability.”
Government Incentives and Policy Easing
To support redevelopment, the Maharashtra government has introduced policy incentives, including:
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Reduction of leasehold-to-freehold land conversion premiums from 15% to 10%
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A further reduction to 5% for self-redevelopment on government land
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Eased approval process for redevelopment proposals
Additionally, realtors undertaking redevelopment of cessed buildings are entitled to an incentivized Floor Space Index (FSI)—50% more than the FSI consumed to house existing tenants. This makes such projects financially viable, offering EBITDA margins of 20-30%.
Despite its potential, redeveloping cessed buildings comes with challenges. Many of these properties are small, congested, and fall under the Rent Control Act, complicating tenant negotiations and project approvals.
Nonetheless, the combined impact of structural audits, policy easing, and persistent demand positions Mumbai for a robust redevelopment-led housing boom in the coming years.
