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New horizons - 11th August, 2007. Times Property (Times of India)

Real estate is fast becoming a strong option for investors

Real estate is fast becoming an important part of an investment portfolio and Mumbai seems poised for a leap as a property investment proposition, especially with a series of infrastructural initiatives. The returns on investments in the commercial property segment vary from 8% to 11% conservatively and on the residential front returns after leasing the apartment vary from 4% to 7% depending on various factors. There is also the upside of possible capital appreciation.

Malabar Hill, Breach Candy and Altamount Road continue to be Mumbai's golden triangle. This is the country's most expensive real estate and houses sell in the
range of Rs 30,000 to 50,000 a square foot. With the entry price enormously high, appreciation is likely to be marginal in these places. Comparatively, suburbs from Bandra to Dahisar along the western corridor, Sion to Thane in the central area, and Chembur to Panvel have witnessed remarkable developments.

For acquiring residential property between Rs.25 lakh and Rs. 50 lakh Mumbai's extended suburbs have come up as excellent alternative to other high priced locations. Opportunities exist in places like Naigaon, Vasai, and Virar at average per square foot rates between Rs.1,100 to Rs.2,000. Lack of infrastructure in these areas is the major reason for low prices but with increase in construction activities and better amenities on offer at nominal rates these locations are set to emerge as an attractive prospect for investors.

With developers promoting sprawling townships, malls, software parks and office complexes across the city's periphery, it is important to analyse and antici pate what can happen to a location a few years from now. Take, for instance, Mira Road, which is no longer a village-town but a hip and planned suburb. RNA (N.G.), Sanghvi Group, Evershine Group, Asmita Group and Krishna Constructions' several big projects have come up here and many more are under construction here. The going rate for apartments in Mira Road is between Rs.1,200 to Rs. 2,500 per sq ft. Its proximity to Mumbai and accessibility makes it a location with reasonable growth prospects.

For investments between Rs.50 lakh and Rs. 1 crore you have areas like Ghatkopar, Powai and of course the stretch from Mulund to Thane which is fast developing and has already seen considerable appreciation. Ghatkopar and Chem bur offer prime real estate at affordable prices while Powai has major growth areas like SEEPZ and MIDC and the presence of the hightech Hiranandani Business Park (HBP). Mulund boasts of a host of ongoing residential projects by developers including Lok Group, Neptune, Nirmal, Marathon, Seth Developers and the Runwal Group. Property prices in Mulund have doubled over the past couple of years due to frenzied activity on the retail front. Hiranandani Constructions has created an entire township in Thane and this location remains a good bet for a new entrant with prices ranging from Rs. 3500 to as much as Rs. 5000 per sq. ft.

But the biggest beneficiary of infrastructural developments have been the eastern suburbs of Navi Mumbai including areas like Kharghar, Airoli, CBD Belapur, and Sanpada which remain viable investment areas. Rates in Navi Mumbai range between Rs.3000 to Rs.5000 per sq. ft. in Vashi for residential properties. With the extension of suburban railway, Panvel is a new contender and is gaining importance with the announcement of several construction projects including the international airport and Reliance's upcoming special economic zones. Panvel averages between Rs.1800 per square foot to Rs.3000 per square foot for residential apartments.

The hottest spots for middle-level investors are projects in various stages of construction in Mumbai's northern suburbs, along the Malad - Goregaon - Kandivili belt which have a lot in store. Kandivali is one of the fastest growing suburbs and offers the right mix of infrastructure, recreation facilities, and good residential projects. Valley of Flowers, Oberoi Park View, Highland, Spring Leaf, Ekta Meadows, Evershine Crown, Whispering Palms XX-clusives, and Kalpataru Gardens are some premium projects in Kandivali East with rates between Rs.3000 to Rs.5500.

Differentiating property investment in the Rs.1.5 crore going up to Rs.2 crore segment, then acquiring property in areas like Andheri can be very rewarding. Andheri (West) offers a potent mix of residential, commercial and retail development that has transformed it into one of Mumbai's most sought after suburbs. Its strategic location, excellent connectivity to other parts of Mumbai and airports, malls and multiplexes has already made capital values here touch Rs.12,000 a square foot.

Other well-known builders like Oberoi Constructions, Rahejas, Mayfair Group and Samarth Builders also have prestigious projects in Mumbai's suburbs, which have emerged not only as the preferred location for new residential development in Mumbai, but a clear trend in commercial real estate indicates a movement to locations between Bandra-Kurla and Andheri-Malad. From the investor's view point, a location's degree of development is indicative of future appreciation potential. Property investment and acquisition is seen as a medium to long-term investment tool. Each property investment opportunity must be assessed on its own merits and overall cost with incidentals like stamp duty and other charges.