Red Flags Home Buyers Should Watch Out For in MMR Peripheral Areas

The Mumbai Metropolitan Region (MMR) continues to be a magnet for real estate investment, offering a wealth of opportunities, particularly in the peripheral areas. Despite the lure of lower prices and new developments, there are significant pitfalls that potential buyers must navigate.

Delayed projects – a common problem: A common problem in the MMR real estate market is project delays. Data from the Real Estate Management Institute (REMI) indicates that over 30% of the region’s residential projects are delayed beyond their expected completion date. These delays can financially burden buyers, forcing them to bear the double burden of rent and EMI payments without a definite possession date.

Construction freeze – a warning signal: The abrupt halt to construction activity 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 long periods of inactivity with caution.

Build quality – essential for monsoon climates: In areas prone to heavy monsoons like MMR, the quality of construction is crucial. Poor construction can lead to significant problems such as water infiltration and structural damage. Potential buyers should assess the developer’s construction quality by viewing other completed projects and checking for signs of damage or premature deterioration.

New developments in the suburbs are particularly vulnerable to monsoonal effects such as 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 assessments essential.

Assessing Developer Credibility: The track record of the builder is crucial in mitigating investment risk. To assess trustworthiness, buyers should research the developer’s history, including previous projects and any legal issues. Dealing with registered developers listed by credible organizations can provide additional reassurance.

Promised vs. Actual Infrastructure: Buyers should be skeptical of promises of future amenities and connectivity. More than 60% of buyers report feeling misled by promises of infrastructure developments that are still a long way off, according to the 2024 Real Estate Future Trends Report.

Regulatory safeguards: Checking whether a property complies with RERA requirements is essential for legal protection against delays and misrepresentation.

The importance of due diligence: Thorough due diligence is essential. This includes verifying land titles, assessing construction progress, and consulting with existing buyers. Hiring independent auditors to evaluate structural integrity and material quality can prevent future liabilities.

In conclusion, while the peripheral MMR real estate market offers attractive investment opportunities, it also presents significant challenges. Awareness of these red flags and proactive research can protect against potential financial losses, making an investment a safe and rewarding venture.

(The author is a partner at Palladian Partners Advisory Pvt Ltd.)

Published: Tuesday, July 23, 2024, 4:25 PM IST