By Abhishek Kiran Gupta, Head – Research, Jones Lang Lasalle Meghraj
Mumbai (called Bombay until 1989) initially owed its status as India’s financial and trading hub to the fact that it housed major financial institutions – the Reserve Bank of India, the Bombay Stock Exchange and numerous banks. Earlier, commercial office activity was concentrated in the Central Business District and parts of the Secondary Business District. India’s most prominent skyscrapers loomed up from Nariman Point, defining Mumbai’s famous skyline from an iconic location that emerged on reclaimed land during the construction boom of the 1970s. Retail in Mumbai was booming even then, even though it was confined to traditional bazaars on the island city and lacked an organized approach.
By 1989, the city had lost a significant share of its organized textile industry to a large-scale labor strike. However, other industries in the central suburbs and non-formal occupations flourished, supported by and supporting Mumbai’s growing population. Increased suburbanization in the 1980s led to a spurt in population growth in the northern secondary districts, resulting in decelerated growth on the island city. By this year, Mumbai’s real estate growth was slowly gearing up for a six-year climb until 1995, when valuations in the central districts reached astonishing peaks – and then fell. In the same year, the city launched a second seaport – the Jawaharlal Nehru Port at Nhava Sheva – to serve as a hub port and also to help decongest Bombay Harbor.
Mumbai in 2009 is still the commercial and entertainment capital of India, generating about 5% of India’s GDP and contributing over one-third of the country’s tax revenues. The metropolitan region, with a population of about 21 million, now includes the island city, its suburbs and parts of adjacent Thane and Raigad districts.
Apart from the Bombay Stock Exchange, the city now also houses the National Stock Exchange of India. Together, these two account for most of the share trading volumes in India. Today, the city is home to major financial institutions and the corporate headquarters of several Indian companies and multinational companies.
Mumbai’s airport – the country’s busiest – and its two seaports together handle 60% of the country’s passenger traffic and much of its cargo, underscoring its importance as a major South Asian industrial and logistics hub.
With the economic liberalization that began in the 1990s, Mumbai saw a large share of the tremendous growth in the BFSI sector. This led to extensive construction of commercial office space in the city’s Secondary Business Districts and Bandra Kurla Complex soon emerged as a viable alternative to the saturated Central Business District. Along with Bangalore and NCR, Mumbai has absorbed a considerable share of the business being outsourced to India over the last decade, leading to the growth of IT/ITES nodes in the markets of Andheri, Powai, Thane and Navi Mumbai.
Mumbai’s retail landscape has also changed significantly. India’s high income demographics and resultant growth in consumerism have spurred on organized retail, and nowhere are the results more evident than in Mumbai – which now features more than 40 operational malls.Mumbai’s real estate market has seen some significant turbulence – from the steep growth from 2005-1H08 across sectors to the economy/sentiment-driven decline in 2009, and to the current time of gradual recovery. Even in subdued times, the city has lost none of its forward potential. The recently launched Bandra Worli Sea Link has come as a significant step in decongesting the city’s transport networks, paving way for further infrastructure growth. Numerous other landmark projects are on the anvil as well to ensure that Mumbai maintains its iconic status as the country’s most vibrant real estate market. These include the Mumbai Metro Rail Project, Navi Mumbai International Airport, Dharavi Redevelopment Project and Nhava Sheva-Sewri Sea Link. These projects, which are in various stages of planning and construction, embody Mumbai’s vision of inclusive growth, a diversified occupier base and world-class infrastructure.