Mumbai's real estate market has soared to unprecedented heights in recent times, even exceeding the 1995 peak levels
With demand clearly in excess of supply, the Mumbai real estate market has reached unprecedented heights, exceeding the 1995 peak levels. The key difference between what happened in 1995-96 and today is that now there is "ONLY" genuine demand, thanks to good economic performance, rising incomes, and better quality housing. Land prices have attributed to higher pricing for final products but greed has also been a factor in cases where land acquisition costs have nothing to do with unreasonable demand by some developers.:
Locations in South Mumbai such as Nariman Point, Churchgate, Colaba, Altamount Road, Malabar Hill, Napean Sea Road and Breach Candy remain the most sought-after residential addresses by the diamond/jewellery industry folks, in dustrialists and stock market related folks. Other than the high prestige values attached to them, these areas have also been traditionally preferred as residential locations due to their proximity to the CBD.
Capital values of end large apartmen well-maintained old er buildings and new projects, in South Mumbai, have crossed the Rs.50,000/sq.ft and Rs.60,000/sq.ft mark (based on carpet area calculation), respectively, an increase by almost 70-100% over the last few years. The higher property prices are creating a mismatch in comparison with the requirement budgets and affordability and hence there is a bit of stagnation hitting the market.
The traffic of expatriates is on a rise in the city, driving demand for high-end property particularly in South Mumbai. With limited availability in prime locations, the rental values in this part of the city have witnessed an increase too.
Property prices in the city are not coming down and are not likely to but the rate of increase is lower with the exception of Worli, Prabhadevi, and Parel areas in Central Mumbai which have witnessed an increase in prices from Rs 14,000/sq ft in 2006 to Rs 23,000/sq ft in 2007. Rentals too have risen at a higher rate of between 12%-20% over the same time.
With the Supreme Court of India clearing the way for redevelopment of the land locked defunct mills in Central Mumbai, a number of large-scale commercial real estate development on mill land has taken place during the last five years.
The entire mill area is transforming into a plush corporate zone with the biggest labels, multicuisine food courts, lifestyle shopping malls, five-star hotels and exclusive residential areas. Moreover, the mill belt is centrally located; making it accessible to North and South Mumbai.
The 2005-end National Textile Corporation's (NTC) transactions have greatly altered the face of land transactions in Mumbai. Starting with the sale of Jupiter Mills in March 2005, which was t approximately Rs 4,300 per or municipal FSI, the market eached an all time high when he fifth mill, Kohinoor Mill No. 3 was sold at about Rs 15,000 per sq ft.
With high disposable income and easier availability of housing finance is driving large scale residential growth in suburbs between Bandra-Andheri, Goregaon, Malad, Kandivali, and Borivali sustaining a property boom that has continued over the last five years.
Re-development projects dominated by 'Raja Builders' and few others have added supply, which has been easily absorbed leaving appetite for more. There is a marked shift in preference for new developments which reflects a lifestyle shift, as these projects offer well-equipped gyms, swimming pools, landscaped gardens, and adequate parking facility.
The earlier concept of high end properties being based largely at southern locations in the city is slowly changing with many apartments in posh suburban localities like Bandra being available at higher rates than those of similar properties in some areas like Worli and South Mumbai.
Also, the escalation in rents has been the highest in the suburbs of Bandra, Andheri and Malad. In Bandra, a two-bedroom apartment was available for Rs 40,000- 70,000 a month, in 2005. Today, it is Rs 65,000-1,50,000 per month. That is an increase of up to 125%.
The earlier business destination of South Mumbai has now given way to the new business districts, which have come up in the suburbs of Bandra Kurla complex and the Andheri-Powai belt. A number of knowledge and technology intensive sectors have emerged as sunrise segments fuelling demand for commercial space requirement. With a bulk of construction activity taking place here, Malad has witnessed a surge in demand for large format retail stores and office space from the IT/ITeS and BPO sector.
Mumbai as a city has transformed itself in recent times and continues being on a high growth curve.