Developer suicide puts spotlight on Mumbai-Thane realty mess

Wednesday's suicide by prominent developer due to cocktail of graft, policy paralysis and venal politics fouling the market, say observers

“Policy paralysis” and political interference are rampant in this metropolitan region for property developers, says the trade in the aftermath of Wednesday’s suicide by the president of the Thane unit of the Maharashtra Chamber of Housing Industry.

Suraj Parmar, who killed himself on Wednesday, was promoter of Cosmos, a Thane-based realty group. In a 15-page suicide note, he has cited being subject to a series of approval delays for his projects and a stuck decision making system for the step he would take.

While Mumbai is home to India’s costliest real estate, Thane is the fastest growing housing market in the country.

“Parmar used to fight politicians and officers over corruption. Most of us settle the matter and close it (but) those kind of margins are no more left in real estate to pay politicians and officers,” said the managing director of a Mumbai-based developer. He declined to be identified.

Builders, he said are caught between stagnant sales on the one hand, and corruption and delay in approvals on the other.

The housing market in the Mumbai Metropolitan Region has recorded its worst half-yearly performance since the financial crisis of 2008, with sales weakening even as 200,000 units remain unsold, according to property consultant Knight Frank. New housing project launches fell by 47 per cent in the first half of this year.

“Politicians and officers are exploiting and squeezing developers. It has become difficult to run the business. Most of the developers are under distress and the balance sheets of developers are under stress due to delay in approvals,” said the founder of another large group in Mumbai. This person, too, declined to be identified.

“Like farmer suicides, soon you will hear of developer suicides,” he predicted.

Pranay Vakil, founding chairman of Knight Frank, says there is total confusion in the way the government announces policies. “Development control rules lapsed long ago and a new set of rules are yet to be announced, despite the fact that they are 20-year policies. Developers’ interest metre is ticking and nobody likes uncertainty,” he said.

To illustrate his point, he said if under the old policy a developer paid Rs 5 crore for certain development rights but needs to pay Rs 8 crore under the new one, he is not allowed to set off the Rs 5 crore already paid and must pay the full Rs 8 crore. Parmar faced mounting debt and approval delays for his projects.