Mumbai Real Estate Stocks Plunge as BMC Enforces Water Restrictions
Shares of major real estate developers with significant exposure to the Mumbai metropolitan region traded lower on Wednesday after the Brihanmumbai Municipal Corporation (BMC) announced fresh water curbs, including a suspension of water supply to construction sites, amid an acute shortage caused by delayed monsoon rains.
Among the biggest losers, Lodha Developers declined 3.64 per cent to Rs 903.80 in morning trade. Oberoi Realty fell 2.84 per cent to Rs 1,656.40, while Aditya Birla Real Estate slipped 1.33 per cent to Rs 1,298.20. Godrej Properties was down 1.29 per cent at Rs 1,771.30, and Mahindra Lifespace Developers lost 1.24 per cent to trade at Rs 338.55.
The Nifty Realty index fell 0.77 per cent to 811.8, retreating after two straight sessions of gains. Investor sentiment was hit after the BMC tightened water restrictions across Mumbai as reservoir levels dropped to critical levels. According to the civic body, water stock in the seven lakes supplying Mumbai had fallen to just 10.35 per cent of total capacity as of June 16, prompting emergency conservation measures.
As part of the latest restrictions, the BMC said no new water connections would be granted to construction projects until further notice. It also ordered the immediate suspension of all temporary water connections provided to construction sites across the city. The move comes as the delayed arrival of the southwest monsoon has intensified concerns over water availability in India's financial capital. Mumbai relies heavily on rainfall to replenish seven key reservoirs - Upper Vaitarna, Modak Sagar, Tansa, Middle Vaitarna, Bhatsa, Vihar and Tulsi - that collectively meet the city's drinking water requirements.
The civic body has already imposed a 10 per cent water cut across Mumbai and has now extended a 20 per cent reduction in daily water supply to industrial and commercial establishments as well as sports clubs to conserve dwindling reserves. In addition, water supply to swimming pools has been disconnected, while the use of potable water for vehicle washing, gardening and road cleaning has been prohibited. Heavy industrial users, including refineries, railways and defence establishments, have also been directed to rely on treated sewage or recycled water for operational requirements.
Industry executives warned that the restrictions could slow construction activity and increase costs across Mumbai's property market. Speaking to CNBC-TV18, Hiranandani Group Chairman Niranjan Hiranandani said the civic body should have introduced the measures earlier and acknowledged that the curbs would lead to a 'postponement of construction activity.' He added that developers should view the crisis as an opportunity to invest in water recycling infrastructure, arguing that 'Singapore puts zero water into the sea, while Mumbai still puts a large part of its sewage into the sea, untreated.' Hiranandani also called for greater adoption of recycled water and said subsidised water for certain sectors should be discouraged.
Deben Moza, Executive Director at Knight Frank India, told CNBC-TV18 that the construction sector remains heavily dependent on water and warned that the affordable housing segment could face the biggest impact from the restrictions. 'Water shortage would impact construction costs,' Moza said, adding that the industry should increasingly rely on recycled water rather than potable water for construction activities.
