Lodha, Oberoi, other realty shares under pressure; what's weighing on Mumbai-focused players?

Most real estate stocks were under pressure on Wednesday's trade after the Brihanmumbai Municipal Corporation (BMC) announced fresh water conservation measures in Mumbai, including the temporary suspension of water supply to all construction activities, amid delayed monsoon rains and dwindling reservoir levels.

At 10:50 am, shares of major Mumbai-focused developers were trading lower. Shares of Godrej Properties fell 1.00 per cent to Rs 1,775.70, while Lodha Developers declined 2.57 per cent to Rs 913.15. Kalpataru Limited was down 2.16 per cent at Rs 330.15, and Oberoi Realty slipped 1.48 per cent to Rs 1,678.00. However, Keystone Realtors bucked the trend, rising 1.59 per cent to Rs 406.

Why are Mumbai-focused real estate stocks falling?

The stock movement came after the BMC announced additional restrictions on non-drinking water usage to conserve the city's dwindling water reserves. According to the civic body, water connections supplied to all construction sites will be temporarily disconnected from June 17, while new water connections for construction projects have been suspended until further orders.

The civic administration said the measures were necessitated by delayed rainfall attributed to El Niño conditions and a sharp decline in water levels across reservoirs supplying Mumbai. A 10 per cent water cut has been in force across the city since May 15.

The BMC said water connections to all swimming pools will also be temporarily disconnected. In addition, industrial, commercial and sports club establishments will face a 20 per cent reduction in water supply as part of the conservation drive.

According to the civic body, Mumbai and its suburbs require around 4,664 million litres per day (MLD) of water, while the city currently receives about 4,100 MLD from available sources. As of June 16, water stock in the reservoirs supplying Mumbai stood at only 10.35 per cent, raising concerns over water availability if the monsoon is further delayed.

The BMC has also directed establishments, including Central Railway, Western Railway, HPCL, BPCL, MIDC, the Indian Navy and other major entities to increase the reuse of treated sewage water for operational purposes. Public sanitation facilities have been advised to use tanker or borewell water wherever possible, while activities such as vehicle washing, watering gardens and road cleaning should rely on non-potable water sources.

The municipal administration warned that strict action would be taken against any individual or establishment found misusing or wasting drinking water supplied by the BMC.

A look at the project pipeline of key Mumbai real estate players

According to Zee Business research, among the major real estate players, Prestige Estates has 66 ongoing projects spanning nearly 129 million square feet (sq ft).

Keystone Realtors is currently developing 17 projects with a total area of 8.7 million sq ft, while Ajmera Realty has seven ongoing projects covering 2 million sq ft.

Additionally, Mahindra Lifespace Developers is undertaking redevelopment and new projects with a total development potential of 13.83 million sq ft.

Here's a list of the key Mumbai real estate developers:

• Prestige Estates
• Godrej Properties
• Lodha Developers
• Keystone Realtors
• Ajmera Realty
• Mahindra Lifespace Developers
• Oberoi Realty
• The Phoenix Mills

Market participants will closely monitor the impact of the restrictions on construction activity, particularly for developers with significant exposure to the Mumbai Metropolitan Region, as the water curbs remain in force until reservoir levels improve.