Mumbai suburban- The ideal place to invest in
No Indian city ranks amongst the most liquid real estate markets in the nation, as Mumbai. The commercial capital of the nation has been equivalent with high prices and the suburban side of the city bears testimony to this fact.
In regard to this, NHB Residex (a mechanism, which could track the movement of prices in the residential housing segment) displays that in Jan-Mar 2011, the index value for Mumbai was 175, which aggravated to 190 in the same quarter of 2012. Experts suggest that it will shot up to 222 in 2014, a steep increase of 26.8% from that of 2011 tenure. On the basis of this scenario, key developers in south Mumbai suburban have taken recourse to lure the home buyers with a number of freebies (during the festive seasons) that has boosted the sales incredibly.
Suburban scenario
According to JLL reports, the Dadar-Parel-Worli Stretch has witnessed a jump in sales in 2013. Reports from brokerage firms confirm that the sales deed registrations for the initial five months have witnessed a robust growth. To add to it, the slump in property rates last year offers a low base and makes the numbers even better.
According to property consultants, the offerings are set to be in the premium segments since the price range in the stretch ranges between Rs 20000- Rs 45000 sq ft. Builders have been open to negotiation in premium segment and have lessen the rates in support of a sizable up-front payment.
To add to it, JLL report further corroborates that more than 3 million sq ft of office space have been absorbed in suburbs like Bandra East and Kurla. This have triggered the demand for residential property. Possibility of future supply of 4 million sq ft of Grade A office space will meet the growing demand for residential properties.
The demand for office space in these areas are driven by diamond trade, banking and financial institutions, corporate houses, consulting firms, insurance, sales etc. To add to it, such corporates show a preference for the Bandra Kurla Complex. Interestingly, few iconic residential buildings (like NCPA at Nariman Point) will escalate the capital value to a few notches, compared to Grade A office spaces. This confirms that residential properties in Bandra East is likely to experience a steady appreciation.
Few areas on the Northern suburbs like Goregaon East and Andheri East have been high on the radar in context to demand for residential property. The central point of the investors must be on the strategically situated residential projects by key developers such as Sheth, Oberoi, Kalpataru etc.
On evaluating the trend flowing in the suburbs, this would be the perfect time for change into a seller market from buyer’s market. If this trend does not stop, the prices for residential properties across all micro-markets in Mumbai is likely to follow the upward trend till the festive seasons.
Best Residential Locations
According to JLL statistics, the best performing residential markets in 2012 in Mumbai are Wadala, Parel, Dadar(east), Tilak Nagar, Sewri and Chembur. The capital values in these areas grew to 10% Y-O-Y. The growth of potent commercial office market activity in south central Mumbai triggered the demand for residential apartments. To add to it, the sub-markets have been on the lucrative end due to the attractive pricing in comparison to premium locations of South Mumbai.
Due to better lucidity of the new DCR, numerous new projects will be launched on time in 2013, together with the assurance of the builders on meeting the promised deadlines. Given the rising trend, the increasing demand in the land rates and surge in construction costs will not bring about any significant price correction. Though the State Government proposes to do the needful to aid the rising population, the inherent demand for a residential property in Mumbai is likely to be strong this year.
Ideal Commercial Locations
The Nariman Point in Mumbai is one of the most pricey central business districts office locations in India. Office rentals remained steady for Grade A office buildings, while the Grade B buildings experienced a sharp decline. The absorption forecast for commercial locations in Mumbai in 2013 rose to 12% in comparison to last year. Mumbai saw an absorption of 6 million sq ft of commercial space in 2013, however, construction of new projects are not likely to pick up before 2015.
The rate of completion for new office projects is likely to be less than the previous three years. Few speculative completions will not reach its end before 2015-16. Any major enhancement in occupier demand will only increase the pressure on supply and stimulate the increase of capital values and rents in Grade A office buildings with key locations.
The central Business Districts in Mumbai include Ballard Estate, Nariman Point and Churchgate, while the Secondary Business Districts comprise of Worli, Bandra Kurla Complex, Lower Parel, Kalina etc. Given the lack of high quality, perfectly sized Grade A stock in major locations of the city, the rental values are likely to increase significantly in 2013.
In 2013, the rental values of the malls are also likely to experience an upward trend. Due to high street rentals, the spaces will become unviable for most of the retailers and will have a decreased activity in 2013. BKC, Andheri (W) and Navi Mumbai markets are expected to see increased rentals in 2013, however, the Parel, Bandra Linking Road and Ghodbunder road markets will witness rent stabilization.
