Mumbai’s real estate sector may face fresh operational challenges after the Brihanmumbai Municipal Corporation (BMC) suspended water supply to construction sites amid declining water reserves and delayed monsoon rainfall. The civic body’s decision comes as the city’s lake stock levels dropped to 10.35% on June 16, raising concerns over water availability.
While industry stakeholders expect the impact to remain limited if rainfall improves in the coming days, an extended restriction could increase construction costs, delay project execution and put pressure on developers’ profitability.
Water plays a critical role in construction activities such as concrete curing, plastering and other civil works. In the absence of municipal supply, developers may have to rely on private water tankers or recycled water, both of which involve significantly higher expenses. According to Chintan Vasani, Partner, Wisebiz Developers, construction costs could rise by 5-10% if the restrictions continue for several weeks.
“Water is a critical input in the construction process. If developers are compelled to procure water from alternate sources for an extended period, overall project costs are likely to increase materially,” a real estate developer said.
Industry participants estimate that a prolonged disruption could reduce developers’ Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) margins by around 4-5%, particularly for projects currently under active construction.
Beyond cost escalation, persistent water shortages could slow project progress and affect possession timelines, potentially delaying revenue recognition for developers. Market observers are expected to closely monitor Mumbai-focused developers such as Lodha Developers, Oberoi Realty, Godrej Properties and Sri Lotus Developers for any impact on project execution.
The development comes at a time when the sector is already dealing with labour shortages, rising construction material prices and other execution-related challenges. Industry experts, including Keval Valambhia, real estate expert, Urban Planner and Architect, believe that if water supply restrictions are lifted within the next two weeks, the effect on construction activity may remain manageable.
However, a prolonged shortage beyond 15 days could lead to higher costs, slower project deliveries and increased pressure on margins, making water availability a key concern for developers and investors alike.
Source: NDTV Profit
