mumbai property capsule

MUMBAIPROPERTY CAPSULE

2015

2Year 2015 failed to bring the much-needed relief to the real estate market of the Mumbai Metropolitan Region (MMR). While the real estate markets of Bangalore, Pune and Kolkata showed some resilience, Mumbais realty continued to suffer. Property registrations and new launches witnessed a dip in most of the zones.

High property prices and unsold inventory continued to plague the landscape. Additionally, proposed increase in Floor Space Index (FSI), state governments draft Development Policy 2034 and delay in infrastructure development marred the citys realty. Even the financial schemes, low down payment options and freebies offered by developers failed to infuse momentum into the market.

Interestingly, the subdued sentiments of buyers were not shared by investors. The city witnessed a rise in Private Equity (PE) investments and Foreign Direct Investments (FDI) in 2015, while Rupee devaluation led to increase in investments by Non Resident Indians (NRIs), especially from Dubai and Singapore. This brought the much-needed liquidity in the cash crunched market of the MMR.

According to experts, the rise in PE and FDI funds is due to the growth in GDP, controlled inflation and various lucrative schemes being offered by developers. However, most of these investments have only been made in projects of reputed builders.

Keeping in mind the increasing enquiries by NRIs, few developers have even launched projects particularly for NRIs in Thane and Navi Mumbai.

The year also heralded the growth of Mumbais commercial market, especially e-commerce and Banking, Finance Services and Insurance (BFSI) companies. Vacancy level in commercial setups dropped and a few big tickets sales took place. The Versova-Andheri-Ghatkopar metro network and the Santacruz-Chembur Link Road, which were completed last year, have contributed to the improvement in commercial activity in the Secondary Business Districts (SBD) of West and Central Mumbai.

POLICY CHANGES

Increase in stamp duty charges

The cabinets approval to increase stamp duty by one per cent and levy cess on Transfer of Development Rights (TDR) for redevelopment projects in the MMR, was not welcomed by private builders. The move is expected to further increase property prices.

MUMBAI

Jan-Mar 2015 Vs Oct-Dec 2015

Kalyan

Navi Mumbai

Kalyan

Navi Mumbai

Kalyan

Navi Mumbai

Borivali (East)6%

Ghodbunder Road1%

Powai-2%

Cue Parade-6%

Manpada2%

Andheri (East)5%

Seawoods-3%

Kharghar4%

Investment by HNIs, PE firms has increased significantly in the MMR in the last one year.

Delay in the construction of

major infrastructure projects

marred Mumbai Metropolitan

Regions realty.

3MUMBAI

Capital and rental values remained unchanged in Mumbai with developers maintaining property prices in order to infuse some positivity among home buyers. Absence of end-users scarred the real estate market of Mumbai heavily. Localities in central suburbs saw robust activity in the last one year.

Growth Drivers:

The Reserve Bank of Indias repo rate cut by 25 bps in March 2015 and 50 bps in September 2015 brought some cheer among end-users

Increasing NRI and PE investments allowed developers to complete their existing projects

Construction work on Phase-II of monorail connecting Wadala to Jacob Circle commenced

Spoilers:

Delay in the construction of Mumbai Urban Transport Project (MUTP), Jogeshwari-Vikhroli Link Road (JVLR), SantacruzChembur Link Road (SCLR), Metro and monorail Phase-I have led to subdued sentiments

The construction of Trans Harbour Link Road (Worli-Sewri connector) has been put on hold

Most of the housing supply in Mumbai is in the price bracket of Rs 1crore and above, making it difficult for majority of buyers to afford a property in the city

NAVI MUMBAI

In comparison to Mumbai and Thane, Navi Mumbais realty performed better in the last one year. The region had the advantage of better planned infrastructure and presence of commercial and industrial sectors. The micro-markets of Panvel, Kharghar, Ulwe, Taloja and Kalamboli performed especially well.

Growth Drivers:

Construction work on Navi Mumbai Airport Influence Notified Area (NAINA) commenced

Nearly 80 per cent of the work of Line 1 of Navi Mumbai metro corridor has been completed

Spoilers:

Growing number of illegal constructions in Navi Mumbai are upsetting the realty scenario. In November, Bombay High Court announced demolition of 99 illegal buildings.

Even though work on NAINA has begun, the project has been delayed for years, impacting the real estate market of nearby localities

Delay in the construction work of various SEZs has impacted the commercial and residential market

THANE & BEYOND THANE

Thane continues to be the refuge of mid-segment home buyers. Though the region witnesses slow commercial growth, some of the major office transactions and leasings took place along Ghodbunder Road this year.

Growth Factors:

State government approved of an additional 0.33 FSI for residential and commercial projects

The proposed Wadala-Ghatkopar-Thane-Kasarvadavali metro is expected to reduce the time travel, thus positively impacting the realty market of nearby areas

PROPERTY TYPE

Residential Apartments 97% 97%Independent Houses/Villas 1% 1%Builder Floors 2% 2%

JAN-MAR 2015 OCT-DEC 2015

BUDGET

Affordable Housing 33% 38%(Within Rs 60 Lakh)

High-Income Housing 20% 22%(Rs 60 Lakh - Rs 1 Crore)

Luxury Housing (Rs 1-2 Crore) 37% 36%

Ultra Luxury Housing (Rs 2-5 Crore) 10% 4%


MMR

H1 H1 H1

H2 H2 H2

1% 1%

2%

2% 2%

4%

Navi Mumbai Thane

2015Mumbai Development Plan 2034

In February 2015, a draft of Development Plan 2034 was released by the Municipal Corporation of Greater Mumbai, which faced a lot of criticism by residents, developers and activists. The plan was later scrapped and a revised plan is expected to be released soon. The uncertainty looming over the Development Plan kept many developers from launching new projects.

Increasing Floor Space Index (FSI)

In March 2015, the state government increased the FSI in Mumbai suburbs from 0.33 to 0.60 (on payment a premium). The amount of premium was increased to 60 per cent of the current Ready Reckoner rate, from 30 per cent charged previously. This led to a rise in property prices in Andheri, Bandra, Chembur, Ghatpokar, Juhu and Santacruz.

4 The Swapnapoorti Scheme by CIDCO offering affordable homes in Kharghar magnetised buyers

Most of the projects launched in Thane targeted the mid-segment group, which attracted a lot of enquiries

Spoilers:

High unsold inventory has impacted the real estate market of Thane

Several illegal constructions have sprung up in the region

Age of inventory has significantly gone up in the region

FUTURE OUTLOOK

The revised Mumbai Development Plan 2034 is one of the most anticipated policy changes for 2016

A housing regulatory authority is also expected to be established by 2016

With the Maharashtra government planning a new International Business and Finance Centre (IBFC) along the Thane-Belapur Road, it is expected to be the most sought-after destination for office spaces in the near future

Under-construction metro from DN Nagar and Andheri East to Dahisar and monorail from Wadala to Jacob Circle are expected to impact the rental market

The IT/ITeS Policy 2015 is expected to increase the footprint of these companies in Mumbai and Navi Mumbai.

READY TO MOVE VS UNDER CONSTRUCTION

Ready to Move 62% 63%

Under Construction 38% 37%


CONFIGURATION

1BHK 32% 38%2BHK 43% 41%3BHK 20% 18%4BHK 5% 3%


Ready reckoner rates in Mumbai surge by 30-40 per cent

JANUARY 2015

Mumbai Municipal Corporation revises property tax structure

Mumbai government decides to raise premium on incentive FSI

MARCH 2015

Maharashtra government plans 50,000 budget homes

MAY 2015

Municipal Corporation of Greater Mumbai proposes an increase in FSI across the city

FEBRUARY 2015

State government scraps Mumbai Development Plan 2015-2034

Government hikes Stamp Duty rates for the city

APRIL 2015

Environment Ministry refuses green approval to Trans Harbour Link

CIDCO announces an online approval system for real estate projects

Environment ministry approves the coastal road project

JUNE 2015

Maharashtra CM announces completion of Navi Mumbai International Airport by 2019

JULY 2015

Maharashtra government announces new IT/ITeS policy oering extra FSI to IT rms

AUGUST 2015

Government hikes stamp duty on property transactions by 1 per cent

OCTOBER 2015

State govt decides against increasing ready reckoner rates in 2016

Maharashtra government sanctions Rs 53,000 crore for infra projects

DECEMBER 2015 Smart city like

makeover proposed for Palghar

State government proposes a super expressway between Nagpur and Mumbai

NOVEMBER 2015

IN NEWS

Work on second phase of Mumbai monorail commences

CM approves of additional FSI for Thane projects

SEPTEMBER 2015

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