Majiwada Thane Property Price Boom

According to an industry report, if the transport infrastructure projects announced by the Maharashtra Government in certain areas meet stated timelines, neighborhoods of Mumbai such as Madh-Marve, Majiwada-Kasarvadavali and Ulwe are likely to get costlier.

The report by real estate research & consultancy Knight Frank India highlights that properties in Majiwada-Kasarvadavali may get expensive by about 11.2 per cent due to the proposed construction of a Metro rail corridor from Wadala to Kasarvadavali over the next five years. Similarly, prices in the sea-front Madh-Marve are expected to increase by approximately 14.2 per cent on the back of a projected Versova-Madh sea bridge, and the Nariman Point-Kandivli coastal freeway. Further, in anticipation of the proposed Navi Mumbai International Airport and the much-delayed Sewri-Navi Mumbai Trans Harbour Link, The report estimates Ulwe to continue to see an uptick in price at 9.7 per cent rate per year, which has already inflated over the past few years.

Madh-Marve is the costliest of the three regions where Knight Frank has forecast a growth with an average rate of Rs 13,500 per square feet. While a Property at Majiwada-Kasarvadavali presently costs an average of Rs 8,000 per square feet, prices in Ulwe are floating around an average Rs 6,000 per square feet.

Pankaj Kapoor, Managing Director at Liases Foras, a Mumbai-based real estate research firm, said the low-profile areas of Mumbai are now benefiting because of the sky-rocketing prices in the high-end ones.

FDI – Indian real estate

The central government’s decision to ease the Foreign Direct Investment (FDI) norms will certainly bring in much-needed capital in the cash-crunched domestic real estate sector, but according to experts, it will further fuel the soaring prices.

Property experts say the capital raised from FDI is not cheap. It comes with an interest rate of 20-25 per cent. “If developers take a loan to buy land at this rate, it is natural for them to increase the rate of the property to recover the cost. Earlier, the property market was driven by the end user. Now it is driven by investors,” opines property researcher Pankaj Kapoor, MD of Liases Foras. “FDI has been creating a vicious circle by spiking the property rates resulting in imbalance to the urban economy. While easing of FDI norms is good for investors, it does not solve the affordable housing problem. Rather, the government should ask banks to lend to developers at a cheaper interest rate and set stringent timelines for completion of projects,”  he added.

Gulam Zia, Executive Director of Knight Frank India Pvt Ltd, said the real estate sector is going through a bad phase from the last three consecutive festive seasons. As a result, fund raising has become the highest priority for developers. Although FDI will be a major source of capital infusion for them, this policy shift will not have a significant impact in the short run. “Without the consumers’ interest, no amount of changes in policy decision will have an impact on attracting the foreign investment into Indian real estate market,” he further added.

Conversely, Developers have a different point of view. Anand Gupta of the Builders Association of India feels that the easing of FDI will be very encouraging for the property sector. “There will be an easy cash inflow at a cheaper interest rate. Almost 70 per cent of the project cost goes in purchasing land in Mumbai. Once we are able to buy land at affordable rates, it will also cut down the property prices in the long run. It will, however, take at least a year to see the impact on ground,” said Gupta.