Mumbai's Water Crisis: Impact on Construction and Real Estate

Construction activity in Mumbai is likely to come to a halt with the Brihanmumbai Municipal Corporation (BMC) suspending water supply to construction sites in the city, effective Wednesday.

The BMC, one of the richest civic bodies in Asia, has also announced that it will not sanction any fresh water connections until further notice. This move is a direct response to the reservoir levels declining to just 10.35% of their capacity, as rains have been below par in June. The municipality has also cut 20% of the water supply to industrial, commercial, and sports facilities. Additionally, water supply to all swimming pools has been shut off. A 10% citywide water supply cut has been in place since May 15.

Experts predict that while some developers might use tankers to supply water to their project sites, this solution is not sustainable in the long term. Sanjay Dutt, MD and CEO at Tata Realty & Infrastructure, stated, “There will be a significant impact as work at some of the construction sites will stop.” Dutt added that while tankers can supply water to the projects, they cannot sustain non-BMC sources for an extended period.

Niranjan Hiranandani, MD at Hiranandani Group, emphasized the need for a long-term view and called for initiatives like large-scale water harvesting. “Every third year it happens. We are used to it,” he said. Hiranandani noted that his company has been recycling 7 million liters of water at their Powai and Thane properties for many years, which has insulated them from the current water crisis.

Prashant Thakur, Executive Director & Head – Research & Advisory at Anarock Property Consultants, highlighted the potential impact on various Mumbai micro-markets, specifically South Mumbai, BKC, Andheri, Borivali, and Mulund. Research indicates that the Mumbai Metropolitan Region (MMR) is scheduled to see the completion of around 207,000 housing units in 2026, the highest delivery pipeline in a decade. Of this, Mumbai alone accounts for 69% or nearly 143,000 units.

The real risks, even within BMC limits, are that development progress may not stop immediately, as construction sites primarily rely on groundwater and non-potable sources for actual construction work, while BMC supplies water mainly for labor usage and drinking on-site. Labour welfare compliance could be affected, slowing down the productivity of the workforce on active sites, Thakur said. “If other MMR municipal corporations face similar reservoir stress and impose copycat restrictions, the impact on the wider 207,000-unit pipeline could widen considerably,” he added.

BMC’s jurisdiction is limited to Greater Mumbai, which spans nearly 437 square kilometers. The rest and much larger MMR is spread over 6,328 sq km in eight other municipal corporations, including Thane (TMC), Navi Mumbai (NMMC), Kalyan-Dombivali (KDMC), Mira-Bhayandar (MBMC), and Vasai-Virar. These areas come under different civic bodies, which have not imposed similar restrictions so far.

Amit Jain, Chairman and Managing Director of Arkade Developers, noted that the immediate impact on the real estate sector will be a greater reliance on authorized water tankers, potentially leading to higher costs and logistical challenges at construction sites. However, Jain stated that they do not foresee any significant disruption to project execution, provided alternative water sources remain readily available. “The industry must adopt a more proactive, long-term approach by increasing the use of treated water, recycling systems, rainwater harvesting, and other sustainable alternatives to build greater resilience against recurring water shortages,” he said.