Real Estate in Mumbai

It is expected that the total estimate of rental income potential for Grade A commercial properties in top eight cities of India will be about Rs. 51,800 crore or USD 7.9 billion by the end f 2019, as per the reports of Cushman & Wakefield, a global real estate consultancy. However; the title of report is “Real Estate Investment Trusts (REITs): An Opportunity for Investors and Developers” and it was released on last Thursday.

It is expected that the upcoming supply of Grade A office properties of 160 million sq ft will add Rs 16,300 crore or USD 2.5 billion in the rental income between year 2016 and 2019. However; according to report of Cushman & Wakefield India, “The total estimated rental income between years 2015 and 2019 with existing inventory of Grade A office space will provide an opportunity to the REITs to generate the estimated rental income of about Rs 35,500 crore or USD 5.4 billion.

As per the report, it will provide a wide range of options to occupiers with the option of taping in the larger pool of human resource. Apart from that the listing of REITs in India will encourage the mid size development firms as they will be able to consider this avenue because REITs will provide them incentive and exits to develop high-grade buildings. On the time of implementation REITs were offering slew advantages and benefits to the different stakeholders of real estate market such as; investors, real estate firms, real estate developers and rest of real estate industry. REITs can invest in commercial properties in different smaller cities which can help in the rapid development because smaller cities put the pressure on the top few cities in India.

According to Sanjay Dutt, the MD of Cushman & Wakefield India, “It is expected that over all REITs system will provide a level-playing field to increase transparency in the real estate sector”. Mumbai has the potential to generate highest rental income for REITs till next three to four years while in 2016, in Bengaluru will get the potential to generate rental income equal to Delhi and NCR through the supply of Grade A office spaces. Probably this is correct time when real estate developers should stretch their balance sheets. It is expected that in near future REITs will help the real estate developers to resolve their fund-raising issues and allow real estate developers with an option to exit projects.

Mumbai real estate

Swiss chemical giant Clarian on Wednesday sold its 87 acre land parcel at Kolshet in Thane district to the Lodha Group for Rs 1,154 crore. The plot has a development potential of nearly 6 million square feet. Earlier, Oberoi Realty and Tata Housing also went land shopping in Mumbai for development projects.

Niranjan Hiranandani, Managing Director, Hiranandani Group has observed resurgence in real estate demand as a lot of builders have been looking for land parcels in the last 10-15 days. A part of the revival in this demand can be ascribed to expectations of a stable government at the Centre.

Executive MD Cushman & Wakefield (South Asia), Sanjay Dot notes that real estate prices have bottomed out in Mumbai. He says Lodha’s recent big land deal signals a lot of on ground activities. When asked about the pockets in Mumbai that have the highest growth potential in terms of rate appreciation, this is what he had to say.

“If you talk about property within the Municipal limits of Mumbai, Sewri, Wadala, Goregaon (East) and certain pockets of Chembur. Further, there is a big delta in Bhandup, Kanjur Marg, LBS Marg and in terms of valuation this pocket seems very attractive.

If you go corridor by corridor, we have seen enough upside between Vasai-Virar belts and now it seems to be between Kalyan and Dombivli on the central corridor beyond Thane city towards Bhiwandi where there is lot of traction and appreciation. In the eastern corridor, it is the pockets between Kalamboli & Panvel.

So, despite the present dismal sentiment in the realty sector, we would see these pockets appreciate the most in the near future”.