Mumbai Property Trends in Quarter April-June 2013
Overview of Mumbai property trends
The number of residential units launched in Mumbai in the quarter April-June 2013, shows an increase of almost 50% compared to last quarter. One major contributor to this is a large township project in Panvel. Of the 11,000 units launched this quarter, 68% cater to the mid-end segment while 31% cater to higher end segment. No units in the affordable segment were launched this quarter.
Approximately 38% launches were concentrated in Navi Mumbai while 22% were in western suburbs. The rental values of properties remained stable in this quarter with stable demand for rental housing.
The commercial office sector saw a net absorption of approximately 1.62 million sq-ft in this quarter, which is twice of that of previous quarter. Take-ups were majorly in Thane-Belapur Road (42%), Malad/Goregaon (16%), Andheri (15%) and Thane (15%). The growth was driven by pharmaceuticals, IT/ITeS and media sectors.
Ready residential properties trends
In prominent sub-markets such as South, South Central, North and Central Mumbai where the supply of quality properties is low compared to demand, capital values went up by 4-20% in high and mid-end segments depending on the location and size of the property.
Compared to the first quarter of 2013, capital values for high-end units in South Mumbai went up from Rs. 70,000 per sq-ft to Rs. 75,000 per sq-ft (7.1%), while rentals went up from Rs. 78,000 to 86,000 per sq-ft (10.25%) in South Central Mumbai, Rs. 58,000 to 65,000 (12.1%) per sq-ft in Central Mumbai and Rs. 40,000 to 48,000 (20%) per sq-ft in North Mumbai.
Capital values for mid-segment units in South Mumbai went up from Rs. 45,000 per sq-ft to Rs. 50,000 per sq-ft (11.1%), while rentals went up from Rs. 52,000 to 58,000 per sq-ft (11.53%) in South Central Mumbai, Rs. 37,000 to 40,000 (8.1%) per sq-ft in Central Mumbai and Rs. 27,000 to 30,000 (11%) per sq-ft in North Mumbai.
In the north east and far northern suburbs with healthy supply of quality residential projects, capital values remained stable.
New launches and under construction properties
Some of the major launches in residential units in the second quarter included Indiabulls Phase II in Panvel and a high-end project in Mulund by Tata housing. Western suburbs especially in the Goregaon-Borivali belt saw a few launches. Thane too saw some major growth in residential units.
A number of projects saw healthy construction in the previous quarter almost nearing completion in locations such as Thane and Navi Mumbai. Some projects include Rustomjee Acura and Lodha Aristo.
Commercial Office and Retail Sector
Mumbai saw a supply of 2.2 million sq-ft in the commercial office sector. About 65% of this supply was concentrated in Andheri mostly being IT/ITes developments. Airoli saw an operational SEZ development at Thane-Belapur Road. Rental values remained stable across most locations. Powai saw an increase in rentals by 6% due to low availability. Worli saw a decline in rents by 4% since landlords reduced rents to attract tenants.
In the retail sector, Thane saw the opening of a mega mall with almost full occupancy. With stable demand, the mall vacancy declined by approximately 15% in the quarter. With increased demand and low vacancy, Vashi and Lower Parel saw increase in mall rentals. Mall rentals went up by 17% in Vashi while Lower Parel witnessed 4% increase in mall rentals. Rentals remained stable in other locations of the city.
Future trends
With stagnant demand and healthy supply, residential capital values are expected to have a downward pressure in the city. Many projects are expected to launch in the second half of the year. Real estate developers are looking at investing in organized real estate rather than making individual investment decisions.
Commercial office rentals at locations such as Thane, Thane-Belapur Road and Andheri may come under pressure due to rising availability with moderate absorption expected in third quarter.
With healthy demand and low availability, mall rentals in Lower Parel are expected to increase in the next quarter. Rents in Borivali and Vashi may also witness appreciation. Main street rentals at Linking Road may remain under pressure due to high availability.
