Real estate price trends in Mumbai and its suburbs

Mumbai
Mumbai looks as if it is going to retain the costliest city status for years. The real estate city is buoyant. The city area is likely to witness as appreciation of 5-8% while the suburbs can expect a rise of 7-11%. Influx into Mumbai ready steady. Together with growing internal population, demand will rise to match supply. While recently the Supreme Court has allowed buyers of mill lands to get their development plans approved, it has restrained them from constructing pending the litigation on mill land usage. One therefore doesn’t foresee any oversupply of inventory in the next two years atleast prices would remain firm. On the commercial property front, Nariman Point is making a come back. Prices there surge more than 80% to reach Rs 15,000 a sq.ft. in 2006, it may rise by 20%.
There is limited supply of premium category flats catering to the High Networth Individual. Prices in this segment could move up 20-25%. Overall, increasing land prices seems to be the determining factor in the upward spiral of rates. there is neither slump nor an oversupply situation waiting to happen in 2006 and so it is highly unlikely that the projected appreciation would not take place. Fortunately, speculative demand is not high enough to push prices further. If the mill land case goes against the developers who bought the land, prices could shoot up by another 7%.
Another driver of prices is the switch over of the middle-class from the leasing option to the purchase option. More and more buyers are coming forward with open minds and purchasing what ever suits them or fits them best. Once they find the a property of their choice, they are willing to pay a premium on it if required. Mumbai is more prone to this because of huge commuting distances in the North-South corridor.
MUMBAI MARKET TRENDS
Central Business Districts
Mumbai’s CDB Nariman Point lies at one end of the Mumbai. Nariman Point is also facing the issues plaguing the CDBs nowadays. Market conditions have already forced Mumbai to look at the options outside south Mumbai as business areas. Navi Mumbai was one option, which failed to take off, due to lack of support from the state government. But the Bandra-Kurla complex has succeeded in attracting some major financial institutions and companies. this is mainly because of lower property rates and modern quality constructions with large floor spaces. Several companies have closed down their offices all over Mumbai and consolidated under one roof in the Bandra-Kurla complex. Prime examples of this are ICICI, IL&FS and Citibank. This business complex has come up very well, but until more companies move there soon,. The other supporting infrastructure items like restaurants and public transport will not develop to the same extent as a commercial complex. Nariman Point is certainly feeling the pressure, with its capital and rental rates dropping substantially, over the past couple of years. But this exodus has been limited from the south Mumbai. Another commercial area, which has been developing slowly, is the mill area in Worli and Lower Parel, but this mainly in retail sector.
OVER VIEW OF COMMERCIAL REAL ESTATE MARKET IN MUMBAI
Mumbai is fast being recognised across the world as an IT and ITES hub. High literacy levels, easy availability of intellectual talent at 50-60% lower cost as compared to other international cities, better productivity and a time zone difference of 8-10 hours that makes it possible for offshore corporates to respond quickly since processing is done through Mumbai during the night, are some factors that have made Mumbai the most favoured destination to China, Singapore, Philippines , Ireland and UK.
The S.T.P.I (Software technology parks India) is encouraging more and more IT parks. These buildings are specifically customised for IT and ITES corporate. Scalability, large floor plates, large columns free structures, ample space for large number of work stations, excellent infrastructure are the key attributes that make the IT park and attractive propositions.
Types of office spaces available:
Office spaces available in the city range from 150 sq.ft to 32000 sq.ft. in a single floor plate, larger spaces are available on combined floor plates. Offices spaces are generally categorized as:
Unfurnished or bare shell offices
Warm shell offices
Fully furnished of plug and play office spaces
Location of major Commercial Hubs in the City:
Central business districts in Mumbai are located at Nariman Point, Fort, Ballard estate, Worli, Lower Parel, Bandra-Kurla complex, Santacruz East (Kalina), Andheri East, Malad and Powai.
Apart from these locations the spread of commercial activity is dominant all over the city of Mumbai. The fast growing commercial areas are now shifting to the suburbs Like Bandra, Andheri, Malad, Powai and the likes for simple reason being the proximity to residential location of the manpower and availability of the desired floor space at the cheaper and affordable prices with a lot of options.
The other for the shift in the trend of commercial location is the saturation of the companies in the existing CDBs. This saturation has led to an overload on the infrastructure provisions like power, water, etc. since the local government is unable to cope to the heavy demand a reverse trend has been observed in the existing commercial markets with established companies moving towards the suburbs for a much smoother business development.
Nature of companies / MNCs In CDBs:
Banking, Financial and FIIs, Nariman Point, Fort
Manufacturing
Companies, shipping, law Ballard Estate, Worli, Lower Parel
Firms, Print Media Companies
Etc.
Infrastructure, banking, Worli, Lower Parel, Bandra-Kurla
Insurance, Media, It, Software, complex Andheri, Powai
Manufacturing companies, etc.
Data centres, call centres, back Lower Parel, Bandra-Kurla complex,
Office operations, Trading Andheri, Powai, Malad.
Companies, etc.

Property Rates of Prime Commercial districts in Mumbai

Location Lease Rates**/SFT* Purchase Rates**/SFT

Cuffe Parade 60-100 8000-15000
Nariman Point 80-165 8000-15000
Ballard Estate 80-125 7000-12000
Fort 80-125 7000-12000
Tardeo/Mumbai Central 70-100 7000-10000
Worli 60-110 5500-10000
Prabhadevi 60-100 5500-9500
Lower Parel 50-85 4800-9000
Bandra Kurla Complex 75-125 6000-12000
Kalina 30-75 4000-6500
Andheri(E) 15-75 2000-5000
Andheri(W) 25-60 2500-5500
Powai 30-55 4000-5500
Goregaon 30-50 3800-5200
Malad 20-50 2000-5000
Navi Mumbai 10-50 1000-2800

*Deposits Equivalent to 6 to 12 months are normally charged.
*Business centres also plug and play offices in most of the above districts for Short/ Long Term.
**All rates are in Indian Rupees





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2 thoughts on “Real estate price trends in Mumbai and its suburbs

  1. hie…. i would like to the date of this post….. the content talks about 2006… so i would also want to know that the analysis is made for which year…..would be waiting for reply….
    thank u

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