Tag Archives: Mumbai City

Many micro markets across Mumbai suburbs

Posted on by Track2Realty
Track2Realty Exclusive

Bottom Line: For an outside view, Mumbai might be one property market with a distinct character of the city but the city is a confluence of many micro markets with each having its own distinct and unique character, buyers profile, and most importantly, the different pricing index and ROI (Return on Investment) potential.

Mumbai, Mumbai city, Mumbai property market, Mumbai real estate, Mumbai housing, Properties in Mumbai, Locations of Mumbai, India real estate, India real estate news, Real estate news India, Indian property market, Investment in Mumbai, Mumbai suburbs, Mumbai Suburban locations, Track2Realty, Track2Media ResearchWhen Abdul Majid, an NRI from Middle East came to Mumbai on a property hunt he was initially not ready to believe the local agent who suggested it is not possible for him to indicate uniform trend across the city. The NRI who wanted to settle in the city in the next couple of years was, however, made to believe when the agent took him to different parts of the MMR (Mumbai Metropolitan Region) to showcase the properties with detailed analysis.

“I was actually looking for an analytical report on the potential of Mumbai property market and the ROI potential for my investment. But after having travelled to the property markets across the city I am now convinced that there are many markets within the Mumbai property market and hence the study needs to be done on each of the pockets, if not the many micro markets,” says Majid.

The MMR was notified in 1967, in an effort to address the rising problems faced by inhabitants. More areas were also included in the region and today the MMR covers Greater Mumbai, Thane, Kalyan and Navi Mumbai, apart from several more towns and villages. Over the years, property price rise has been astronomical in the original core parts of Mumbai.

Manju Yagnik, Vice Chairperson of Nahar Group maintains that Mumbai as a city is one of the most prime markets for real estate investments. Being an island city, land is scarce and hence premium attached to it. The potentials of ROI for this matter are mostly positive but vary from place to place. South Mumbai is supposed to be a prime location for residential properties as compared to most suburbs. It consists of various localities with differential premium attached to it based on the area of resident or commercial.

“ROI in new upcoming projects will be better than that from an existing project. But the investments are comparatively high. The areas of development are Central, Eastern and Western suburbs. Depending on the developer, stage of the project and project offering in  terms infrastructure and amenities like location connectivity to other parts of the city, commercial hubs, airport, utility and entertainment hubs, medical centre, school and other educational institutions etc. will determine the ROI,” says Yagnik.

The main city of Mumbai has seen prices rise by as much as 81 per cent since the last of the pricing trough was seen in the second quarter of 2009. The growth in the Navi Mumbai and Thane region has been even greater. This is evident of the fact that with the city to grow in a viable manner, the development has extended in to the newer, outer regions.

The Mumbai property market can be broadly divided into the following:

Western Suburbs

Eastern Suburbs

South Mumbai

Central Mumbai

Mumbai Harbour

Quick bytes

Western Suburbs: Costliest Market—Bandra West @ Rs. 52,000 per square feet. Affordable Market—Nalla Sopara @ Rs. 3,500 per squre feet. ROI Potential—5-7% Year-on-Year

Eastern Suburbs: Costliest Market—Powai @ Rs. 23,000 per square feet. Affordable Market—Ambernath @ Rs. 3,000 per square feet. ROI Potentual—6-8% Year-in-Year

South Mumbai: Costliest Market—Altamount Road @ Rs. 95,000 per square feet. Affordable market—Bombay Central @ Rs. 20,000 per square feet. ROI Potential—3-4% Year-on-Year 

Central Mumbai: Costliest Market—Matunga @ Rs. 45,000 per square feet. Affordable Market—King Circle—Rs. 13,000 per square feet. ROI Potential—5-7% Year-on-Year

Mumbai Harbour: Costliest Market—Nerul @ Rs. 13,000 per square feet. Affordable Market—Khopoli @ Rs. 3,000 per square feet. ROI Potential—10-12% Year-on-Year   

Western Suburbs: The western precincts of the city of Mumbai, known as Western Suburbs in the popular parlance that consists of areas like Andheri, Bandra, Borivali, Dahisar, Goregaon, Jogeshwari, Juhu, Kandivali, Khar, Malad, Santacruz and Ville Parle are among the oldest suburbs of the city. Geographically, the Western Suburbs lie at the western part of Salsette Island and has been witness to suburban sprawl over the years.

This region has a wide range of properties; from Bandra that commands a high premium of capital values with Rs. 50,000 and above per square feet for residential properties to Virar that has the most affordable residential properties for Rs. 4000 per square feet.

Along these two different worlds lies some of the costliest markets like Khar, Santa Cruz, Ville Parle and some of the most affordable markets like Mira Road, Bhayandar and Vasai. In practical terms, this region has something for all kinds of buyer and various housing solutions at different price points.

Modern and well planned connectivity comes naturally to most Western Suburban areas. The reason is that the Western Express Highway travels parallel providing an easy access into and out of the city. The modern Mumbai Metro connections have added an unmatched value to most areas by helping ease out traveling time between them.

Due to shifting of CBD (Central Business District) to BKC there is a huge demand of residential and commercial properties in Western Suburbs. As a matter of fact, the percentage of appreciation is highest in Western Suburbs, it is becoming preferred destination of many investors. The capital value appreciation in the Western Suburbs are expected to be in the range of 5-7 per cent on a year-on-year basis, notwithstanding the slowdown in the market otherwise.

Western line is home to many industrial estates, business hubs and also highly connected via means of Western Express Highway, JVLR, Metro and much more. In order to improve east-west connectivity in Western Suburbs, Metro-2A (DN Nagar and Dahisar) and Metro-7 (Andheri East-Dahisar) have been announced. Arrival of such projects leads to unprecedented growth of both commercial and residential realty projects. This will lead development of various segments which will cater to different ticket size. Hence, all the locations of Western Suburbs can look forward to sizeable growth in medium to long term future.

Eastern Suburbs: The Eastern Suburbs is the eastern precinct of the city and is often referred as the Central Suburbs because the area is served by the Central Line. The Suburbs comprising of localities like Kurla, Vidyavihar, Ghatkopar, Vikhroli, Kanjurmarg, Bhandup, Mulund, and Powai has developed as the most sought after locations of Mumbai due to excellent infrastructure and connectivity.

The Eastern Suburbs have been expanding its residential footprint in such an organic and holistic manner that today the region holds equal attraction quotient for both premium & affordable housing. If there is Powai as the premium housing and business destination in Eastern Suburb, there are locations like Kanjurmarg offering residential options in nearly half the price of upmarket Powai.

Most of these locations are railway stations on the Central Line. Kurla is also an interchange point for the Harbour line. This is a middle class residential region which is increasingly getting dense as the factories are being shifted out and being replaced by shopping malls and apartment blocks.

Mulund, Ghatkopar, Bhandup and Vikhroli are located within 15 kms distance of Powai and are well connected to the Western and Eastern Expressways. Also, these localities have easy accessibility to the domestic and international airport, CST and Mumbai Central. In addition, the Versova-Andheri-Ghatkopar Metro corridor also adds connectivity to these places, especially Ghatkopar.

In terms of the price point, Powai holds the highest capital values with property prices in the range of Rs. 15,000-23,000 per sq feet and rental yields being in the range of Rs. 34-54 per sq feet. Ambernath has the lowest price point with residential properties in the range of Rs. 3,000 per square feet to Rs. 4,000 per square feet. Dobivali and Kalyan also offer affordable properties in the range of Rs. 4,500 per square feet to Rs. 6, 500 per squre feet.

The region has been benefited from important infrastructure project — the Eastern Express Highway — which connects South Mumbai to locations in the Eastern Suburbs, and stretches all the way to Thane. This connectivity has actually worked both ways – it is not that only the residents of Eastern Suburbs are travelling to other parts of Mumbai for work. Rather, residents from other parts of Mumbai are also coming to this part for work, thanks to rapid infrastructure developments and connectivity.

The ROI is expected to be the maximum in Eastern Suburbs due to the price point and the infrastructure. In 2015 also, this suburbs gave the highest appreciation despite of a subdued macro-economic outlook otherwise.

South Mumbi: When a property dealer suggested Kartik Shah to set up his office at Navi Mumbai, instead of South Mumbai market, it seemed to be a sound business sense. After all, the businessman from Gujarat setting up new base in Mumbai was getting a much cheaper place in the upcoming business centre than a cramped old CBD where the property rate and expected ROI on per sq feet was much higher. However, a proper research on Mumbai property market made him understand why South Mumbai still holds its charm and is home to the elites of Mumbai city.

After all, which other place in Mumbai can showcase as many business hotspots like Nariman Point, Ballard Estate, Churchgate, Fort, Cuffe Parade among others. And to add to this, financial organisations such as the Reserve Bank of India and Bombay Stock Exchange makes it one of the busiest parts of the country.

South Mumbai attracts businessman from all over the world and Shah realised that his overseas clientel that mostly stays at South Mumbai hotels such as Taj Mahal, Hotel Oberoi, Hotel Searock Sheraton, Chalukya Hotel on Elephanta Island, there can’t be any substitute of South Mumbai even if the skyrocketing property prices ranges between Rs. 30,000 to Rs. 1,00,000.

Facts speak for themselves. A South Mumbai bungalow was sold couple of years back at Rs. 500 crore. It is a staggering figure in a market that is battling to come out of a slowdown sentiments. But amidst this, one of the costliest land deal 0f Rs. 40 billion took place in South Mumbai. And to top it all, the world’s most expensive home worth $1 billion (£630 million) of Ambanis is here.

Ten duplex apartments at the Lotus Villa in the Napean Sea Road area of South Mumbai have been priced at a minimum Rs. 100 crore each. Each square foot of the apartments costs Rs. 1 lakh. A survey conducted by Wealth Bulletin listed Altamount Road as the tenth most expensive street in the world, with prices as high as Rs 95,000 per sq ft. Altamount Road is just one example.

Places like Altamount Road and Carmichael Road are exclusive localities in terms of the kind of people who are choosing to call them their homes. Besides Bollywood stars, industrialists like Kumar Birla and Ratan Tata, these places are also home to various consulates.

The demand supply mismatch suggests that the South Mumbai property will only go northwards. This can be attributed to the nature of the city, which was dependent on its port for its economy. Over time, South Mumbai CBD became Mumbai’s primary commercial real estate hotspot and it still represents a fair share of Mumbai’s economy. A large number of companies operating in India have their head office in South Mumbai CBD.

With the emergence of peripheral locations, while South Mumbai may have lost its locational preference a bit, most companies still prefer to have their corporate headquarters in South Mumbai CBD due to the proximity of RBI, BSE, SEBI, the political legal fraternities as well as 5 star hotels.

Central Mumbai: The Central Mumbai property market mainly consists of areas like Byculla, Parel, Dadar, Sewri, Matunga, King Circle, Wadala, Mahim and Sion. These are mostly localities where the capital value of residential properties are not very high but still not very affordable. The costliest market is Matunga where the capital values are up to Rs. 45,000 per square feet. The lowest capital values are in King Circle where the price range is between Rs. 13,000 to Rs. 18,000.

Most of the analysts maintain that the proerties in these markets are under valued keeping in mind the location. It is generally believed that the ROI potential of the region could never be tapped due to poor connectivity, infrastructure and public transport. It is hence believed that once the infrastructure is upgraded in the region, these property markets might outperform other parts of the city.

As of now, the rental potential of the region is between Rs. 60 per squre feet to Rs. 110 per square feet. The appreciation in the last year has been quite modest in the range of 4 to 6 per cent.

Mumbai Harbour: Mumbai Harbour areas are harbouring some of the real estate gems and if a Knight Frank report is to be believed, no other areas in and around Mumbai has the kind of ROI potential as the properties on the harbour lines. Knight Frank’s Invetment Advisory Report says Ulwe has a price appreciation potential by 145 per cent in the next five years. The forecast is based on assessment of real estate drivers namely employment, physical infrastructure, connectivity to important locations, access to social infrastructure, planned development, proximity to premium office spaces and land availability.

As a matter of fact, the Harbour region, along the line of Harbour Line of Mumbai Suburban Railway that connects eastern neighbourhoods along the city’s natural harbour, has some of the most attractive property markets, right from Thane to Navi Mumbai.

There is a wide range of property ranging from Nerul that has residential capital values up to Rs. 13,000 per square feet to Khopoli that has capital values of Rs. 3,000 per square feet.

Analysts point out that once the Mumbai Trans-Harbour Line (MTHL) is completed the Harbour Line will not only open many new areas for urban habitation but will also be witness to the kind of ROI that no other region of MMR will experience.

Raj Gala Shah, Partner, Zara Habitats sums it up saying that unlike the past where the industry and office space was located at South Mumbai, todays scenario indicates that businesses choose to shift to locations where the rents and connectivity make economical sense.

“The Financial sector prefers BKC and hence expats, CEOs and business owners would be the buyer profile for Bandra, Dadar, Parel, Matunga CR. Media sector prefers Andheri, the BPO and IT sector has found Malad & Powai appropriate so the younger generation of IT Engineers and Tech entrepreneurs along with Television and Media personalities would fit the buyer profile in Andheri-Malad-Powai,” concludes Shah.

By: Ravi Sinha

Modest appreciation yet Mumbai property market steady

Posted on by Track2Realty
Track2Realty Exclusive

Bottom Line: Contrary to general perception, NHB Residex shows Mumbai is quite a steady property market.

Mumbai City, Mumbai property market, Indian real estate news, Indian property market, NRI investment in Mumbai, Track2RealtyIf only the statistics show a real picture then the Residex of National Housing Bank (NHB) shows the market might have offered a modest appreciation, yet Mumbai is a steady real estate market.

The NHB data accessed till March 2015 shows how historically (since 2007) this market has not been witness to any sharp fall in terms of the pricing index. This is a huge endorsement keeping in mind the downward cycle of the Indian economy in general and country’s housing market in particular in the said period.

Of course, on a micro look the trend is location specific and while certain locations have outperformed quite a bit there are other locations that have been hit with price correction. But overall estimate of the city property market is steady. In the last four quarters, the real data of the said period might not be available with the Residex, what can be vouchsafed at this point of time is the fact that the trend is more or less the same as it has been till march 2015.

Quick bytes

  • Mumbai market along with Pune more steady than other top cities
  • Modest appreciation at a macro level; each micro market showing different trend
  • Projects coming up near new infrastructure developments witness to sizeable appreciation
  • Appreciation potential more with upcoming locations compared to established markets

Different opinion on price index

Parth Mehta, Managing Director, Paradigm Realty feels concerned when he says that over the last one year Mumbai has witnessed very digressed price trends across the city. He maintains that in certain suburbs prices have gone higher due to lesser availability of under-construction and ready stock, whereas in certain areas the volume of sales has increased where there has been higher supply of inventory but prices have not gone up.

“Mumbai is a very location specific market. Certain premium locations like in South Mumbai areas such as Walkeshwar, Carmichael Road, Worli sea-face and in Suburban areas like Juhu sea-face, Carter Road, Bandstand, prime location of Kandivali & Borivali (W) which are dominated by more of business centric population governed by lesser supply of under-construction and ready goods will indeed have price appreciation,” says Mehta.

Vineet Relia, Managing Director, SARE Homes believes that over the past few years, uncertainty around development plans and government approvals has created stagnancy in the overall real estate market. This has largely affected the two biggest drivers of real estate in India, Delhi and Mumbai. However, some of the recent announcements made by the state and central government have given a thrust to the real estate market of Mumbai. As per the recent reports, all these announcements have improved customer sentiments and impacted sale of properties in the areas surrounding outer Mumbai such as Thane and Navi Mumbai.

“In areas like Navi Mumbai and Thane property sales have increased as compared to last year. However, overall the city is experiencing a steady fall in new launches. According to the Knight Frank report, there was a 23 per cent decline in new launches in H2 2015, compared to H2 2014. During the second half of 2015, sale of housing units dropped by 6 per cent year-on-year and clocked slightly more than 34,000 units,” says Relia.

Price index location specific

An optimistic Kedar Joshi, CMO Ahuja Constructions nevertheless asserts that Mumbai market has shown a steady growth in the last four quarters, especially during the festive occasions there has been a considerable investment from buyers in the real estate market due to attractive offers and schemes. Buyers seeking homes are playing a wait and watch approach for a while, and are looking forward to make investments in the areas that offer good quality infrastructure and effective connectivity to all parts of the city.

“The price trend seen among buyers in Mumbai’s realty market is very location centric. A considerable demand pull is especially seen towards the central suburbs like Sion, Ghatkopar and Chembur which are the latest entrants into the location-centric investment run. A steady and positive movement is seen in the price trend particularly being focused on the upcoming and emerging urban sprawls,” says Joshi.

Sandeep Ahuja, CEO, Richa Realty, on the contrary, feels that in the last few quarters the overall prices have come down and are now stagnated at current levels. The fall in many micro markets in last four quarters has been between 7-18 percent.

I don’t see an upward trend for the next 2-3 quarters. Developers are still sitting on high inventory levels and would like to clear that before raising prices. We expect the absorption levels to improve in next few quarters and post that price appreciation. Markets with intrinsic demand, restricted future supply levels and infrastructure development will see maximum price advantage,” says Ahuja.

Micro markets in demand

This raises a fundamental question as to which are the locations that hold more potential. Experts believe any locality is pre-dominantly governed by the infrastructure, demographics, proximity to main highways, railway stations & schools shall alternately command better appreciation.

Developers are also getting smart to identify the potential and are launching projects near the upcoming infrastructure developments like metros and monorail projects. The upcoming Phase-II of Mumbai Metro involving the stretch of Dahisar-Charkop-Bandra-Mankhurd is one such infrastructure development been looked upon. The project has in particular brought a demand leap in the nearby regions like Oshiwara.

The price trend in Mumbai clearly indicates that infrastructure projects located around Sion, Jogeshwari and Oshiwara seem to be altering the real estate landscape in many ways.

In Central Mumbai locations Ghatkopar, Powai and Vikhroli have already been witness to more than average appreciation due to better connectivity and upcoming commercial parks. Other micro pockets which might see price appreciation include locations near proposed metro corridor on Western Express Highway, Mulund, and Dadar in South – Central Mumbai belt.

The property markets in areas such as Thane, Panvel, Dombivili etc. continue to remain the top investment destinations in Mumbai. With improving connectivity, government’s efforts to push stalled projects and increase in corporate interest in these areas, there is likely to be an uplift in residential market sentiment along with an improvement in social viability of the region.

Also, Bandra continues to be a luxury residential hotspot in Mumbai. The area remains a preferred destination for prime property seekers because of its elite profile more options for shopping and higher recreation facilities; thus attracting price appreciation.

Infrastructure calling card

With the JVLR freeway offering connectivity to areas like Bandra and South Mumbai, Western Suburbs such as Oshiwara are fast developing into a good investment option for people who are seeking to draw out maximum potential out of a property. Projects like the elevated road on Thane- Ghodbunder Road are also expected to change the real estate market dynamics.

The final nod for the International Airport at Panvel and proposed SEZs at Dronagiri, Ulwe and Kalamboli will give impetus to the property market in surrounding areas which are now expected to witness growth. Both these developments will give fillip to commercial and residential market in the adjoining areas. While property rates in main Mumbai are no longer within the reach of those who are looking for homes at affordable price, Navi Mumbai has shown an impressive growth with residential housing which are within the budget.

DP confusion responsible for less launches in Mumbai

Posted on by Track2Realty

The new launches have drastically slowed down in Mumbai due to confusion with Development Plan.

Mumbai City, Mumbai property market, Indian real estate news, Indian property market, NRI investment in Mumbai, Track2RealtyA perception has gained ground that the less launches are due to slow sales, liquidity crunch of the developers and other market realities. Though these reasons cannot be ruled out behind some setbacks, the Mumbai real estate has been in a wait & watch mode for quite some time for another significant reason – confusion with the new DP (Development Plan).

It has, as a matter of fact, affected the new launches in the city more than any other factor. The developers do not wish to launch a project now and within a few months find themselves in a position where they have to rush to the Brihanmumbai Municipal Corporation (BMC) for further changes.

The BMC is expected to release its revised Development Plan by February 2016. Last year, the draft DP led to confusion in the market where both the developers as well as the citizens pointed out glaring errors, leading to the removal of then Municipal Commissioner. There were about 8500 suggestions and objections to the draft DP. The developers also maintain that this led to the delay in many new launches.

Dhaval Ajmera, Director, Ajmera Realty & Infra points out that the confusion that has happened with the proposed DP is the primary reason for the slowing down of the new launches in the past one year in Mumbai. The DP is now being rectified, as there have been confusions, wrong reservations that have been filed. Probably certain places that were early declared as residential area are now been under another reservation where the developer cannot launch the project as it is wrongly demarcated. Hence, until the reservation is cleared, launches have had to take a backseat.

“There are instances where property declared as a completely residential zone is now partly claimed under the reservations. Hence, if the developer has planned a project in a certain area, it is affected due to the partial reservations  impacting the launch of the complete project to go on a hold. This definitely affects the developer majorly keeping in mind that the finances are stuck. Keeping in mind the confusion in the draft development plan, it is taking long to solve and we hope to get it resolved probably by May this year,” says Ajmera.

Parth Mehta, Managing Director, Paradigm Realty maintains that where land has been already acquired or development rights has been already obtained there the developers are left with no choice but to go ahead with prevailing DCR (Development Control Regulations) and commence their construction but provisions for extra FSI can always be kept in planning provisions.

“Where developers who are looking at potential new acquisition currently there is a wait and watch scenario with reference to permissible FSI and new approval policy. Where developer has received complete approval and where construction activity is visible at the site there indeed sales are still happening, may not be at a very high velocity but apartments in projects by credible developers with a delivery track record are selling backed by complete approvals in place, home loans facility tie up with banks and subvention schemes offered by banks and institutions,” says Mehta.

Vipul Shah, Managing Director, Parinee Group, on the contrary, believes that the developers are going ahead with their existing developments plan as the new DP has taken a lot of time. However, because of the delay there is a lot of confusion in the industry. This should have been avoided. So the sooner the new DP is released, it would bring clarity to benefit both the real estate industry and the consumer.

“The old DP and the expected new DP has taken a long time and still not sure, which in turn has created a huge confusion in the Industry resulting in imbalance of the realty eco system. Initially the sales were a bit slow but buyers are waiting to buy the right project as we have seen in case of few new launches proving the market is looking up,” says Shah.

The developers demand that the new DP will indeed have to be released keeping in mind no area specific FSI imbalance. There will have to be a balanced distribution of FSI to ensure optimum supply of new inventory in locations, whereby there will not be very highly skewed pricing imbalance.

This also raises a fundamental question as to what extent slow sales have affected the new launches and to what extent the DP confusion has been the catalyst. Most of the analysts tracking Mumbai property market agree that the liquidity crunch, uncertain job scenario, lack of visible parameters for business growth have kept people on wait & watch mode.

As far as homebuyers are concerned, there is a general belief that the confusion has also affected the home buying decision of prospective buyers as many of them are so well informed that they anticipate significant price correction once new DP is implemented.

Developers nevertheless maintain that the price correction has already been factored in today’s prices backed by eased out payment plans . Hence, prices going below this points will not be a viable proposition for the developers considering high input cost. But the new launches have been definitely affected as the developers are in dilemma whether to wait for new DP or go ahead with current DCR. The developers hence demand that the new DP should be in sync with the government’s loud claims of facilitating ‘ease of doing business’.