With no bidders for Mumbai's trans harbour link, will realty take a hit?

The Rs 9,360-crore Mumbai Trans Harbour Link (MTHL) failed to attract any bidders for a third time on Monday asprivate companies stayed away from participating in the tender to build the 22-km sea link between Nhava Sewri and Navi Mumbai.

The link was meant to help decongest Mumbai as it would take the burden from the city’s development to Navi Mumbai.

A consortium of five companies- Tata Realty, IRB Infrastructure, GMR, Srei Infra, and Gammon India - were shortlisted for the project, but all of them stayed away from bidding for it, citing lack of clarity over the project’s financial viability.

IRB Infrastructure, one of the shortlisted bidders, had last week withdrawn from the bidding, citing bad experiences while working on some infrastructure projects in Maharashtra, while the remaining four chose not to submit their bids on Monday even thoughit was the last day for filing technical and financial bids.

A government official told the Business Standard that the policy and regulatory hurdles, especially in land acquisition, and opposition from political parties over toll collection were the reasons for the bidders to stay away. “Besides, companies were reluctant to take major risks considering the huge requirement of finances. MMRDA may carry out project development through cash transfer or annuity basis,” the report added.

And given their stretched financial conditions, no sound company would want to further leverage their balance sheets.

The trans-harbour linkwas tendered in 2008 when Mukesh Ambani and Anil Ambani-led companies had separately submitted their bids but the project was scrapped due to their family feud. Subsequently, MTHL was re-tendered in 2009, but did not receive enough response after which the project was once again tendered in 2012 and five bidders were short listed by the MMRDA.

According to a report in the _ Mumbai Mirror _,the government is now considering the option of doing away with the public private partnership model.Metropolitan Commissioner UPS Madan has been quoted as saying that the latest failed bids will set the project back by at least six months but the government is now toying with the option of taking up the project under the Jawaharlal Nehru National Urban Renewal Mission, which will guarantee a 50 percent funding from the central and state governments.

Whether the government comes up with another viable plan or not, affordable housing is definitely going to take a hit as a delay in the project implies Mumbaikars will have to wait a little bit longer for that dream home.

[caption id=“attachment_1013215” align=“alignleft” width=“380”] Representative Image[/caption]

Following the announcement of big-ticket infrastructure projects such as the second airport and the Mumbai Trans-Harbour Link (MTHL), areas close to them, such as Panvel, New Panvel and Ulwe had started witnessing development.Additionally, there were chances of Alibaug also coming closer with just a 30 minute distance from MTHL and itsextension to Mumbai Pune Expressway. Prices in this area had appreciated significantly inanticipation of this sea link. In fact, areas such as little-known Ulwe, a collection of villages, saw its real estate value skyrocket by an average of 30% annually over the past five years as it was being touted as a node that would not only cater to those who find Mumbai unaffordable, but to those who find Navi Mumbai unaffordable.

“The Mumbai Trans Harbour Link serves as the ambicle chord between transferring life from the island city to its neighboring satellite city in a matter of 50 minutes and was meant to open up at least 900 square km of land and ensure land efficiency. A delay in the project means affordable housing will take a hit. Currently, one has to travel at least two-and-a-half hours from the city centre if he buys a house. The MTHL was meant to change that and make Mumbai life more livable,” says Pankaj Kapor, MD at real estate research firm Liasas Foras.

Just yesterday Godrej Properties increased the size of its Panvel project by 37 acres. The project is located between NH4 and the Mumbai-Pune Expressway and is in close proximity to the proposed second International Airport in Panvel, the Jawaharlal Nehru Port Trust, and the proposed Sewri-Nhava Seva Trans Harbour Link. But with no investors left in the game, end users will not live so far off without the required infrastructure and sea-link in place.

“Today all investors are exiting the market, which is why prices in some areas in Panvel are as low as Rs 3000 a square feet. No one is even entering the market at this time and the only ones suffering is the _aam aadm_i.Property buyers from the western and central suburbs of Mumbai and even south Mumbai have mad enquiries and big realty groups have started work in the node. But these purchases will get deferred until the plan for the link is in place and the project actually starts going, " said another realty expert based in Navi Mumbai, who did not want to be named.

However, Subhankar Mitra, Head - Strategic Consulting (West) Jones Lang LaSalle India, believes another year’s delay would not make much of a difference to real estate activity in Panvel as on-ground action on this undertaking has already been postponed three times over the last eight years.

While the Mumbai-Trans Harbour Link has definitely played a role in the marketing of properties in areas like Ulwe and Panvel and raised the overall desirability quotient for end-users, investors and developers, the anticipation was tempered with an understanding of how things work when it comes to infrastructure in Mumbai.

“If we look at the present status of similar infrastructure projects - such as the Worli-Haji Ali Sea Link, and the Charkop-Bandra-Mankhurd and Colaba-Bandra Corridor metro lines, most of them are stuck in various bottlenecks and running abysmally behind schedule.This is more or less an accepted state of affairs in the financial capital. Therefore, immediate demand for residential properties - and therefore their appreciation potential - in areas such as Ulwe and Panvel will not be affected by this new implementation deferment of the Mumbai-Trans Harbour Link,” Mitra told Firstpost.

However, he did caution that theimmediate viability of commercial spaces will reduce in these areas, which will result in developers deferring their projects further.

This could impact the overall economic potential and job generation in these areas, which will have negative implications on the demand for residential property.