The Market has Changed - December 1 7, 2005 - Times Property (Times of India)

The change has come `The investor has turned into a Landlord' - CHETAN NARAIN

 

Can you give us an update on the Mumbai property market?
WOW... I say this because the Mumbai property market amazes me! We have never seen this before; it's all new, a market completely driven by genuine players and genuine demand. Gone are the days when investors would block area and trade with the properties for profit. The change has come `The investor (trader) has turned into a landlord'. Which has created a further decrease in supply because, `property' is no more being traded, it is being held back with a long-term view to generate rental income which gives a higher yield than bank or conservative investments, not to forget a decent capital appreciation in a growing market. Like in any investment, entry price, determines your returns.

Have the rates gone up across the board in the city?
Yes, the rates have gone up across the board in both commercial and residential segments - especially in the last three months by a whopping 10% in the premium segments only. Developers have being bidding/buying land like there is no tomorrow (which is true - God stopped making land!). But the downside being, the consumer bears the brunt of price rise or becomes victim to the super-super built up (imaginary areas) added by certain developers as a method to reap profits out of such projects where land was acquired at high costs; most of the times, at higher than reserve price or market value. After the NTC mill episode we are about to witness another bid-war on MMRDA plots at Bandra Kurla, end of this month.

Where is this 'ever growing' demand coming from?
Global and Local! I finally feel we have arrived and this is here to stay and only grow further. With a forex reserve of $143 billion, equity market investor wealth soaring at highest ever - Rupees 24 trillion, Gold at its highest, job opportunities offered by constant pouring in of MNCs, Retail, Hotels, F & B, Bpo's, IT etc all such factors give rise to property demand. For any of these above to work, property is the quintessential factor.

What are the other reasons or factors pushing the rates and in which locations?
Further push in prices has come about due to very little supply in sought after locations. Just like the BSE index is based upon 30-odd scrips, the Mumbai property market gets its heat from select locations. In the case of Commercial: Nariman Point, Lower Parel , and Bandra-Kurla are nearly running dry with supply. In residential (premium segments): Cuffe Parade, Malabar Hill, Nepean Sea / Altamount road, Worli, Bandra, Juhu, Versova also have very little to no supply. With the economy looking so good and the way people have made money in stock market and their businesses in the last two to three years, buyers in south Mumbai move around with budgets of Rs 12 to 15 crore for premium residential apartments offering them the lifestyle they seek. Mid-town, between Prabhadevi and Worli is all set to fill that gap offering lifestyle homes only imagined. This is purely my belief: that is the location of the future. With so much of commercial and retail boom in Lower Parel , this would be an obvious choice for a residential hub. Also, with few huge developments yet to come up within that radius, that is a location to watch out for.

In the commercial segment, Bandra-Kurla to Kalina and surroundings areas upto Andheri east are locations to watch for.

For the average man the question is, where are we headed?
The answer is obvious: Unaffordable housing! The making of another London city. Where starting from car parking issues, to traffic, to more congestion in business /commercial areas (In our city also applies to residential areas due to lack of open space per person ratio). The only solution to this is spreading development across the city, Navi Mumbai, eastern and central suburbs where developments have already begun and in certain locations scaled to new highs in terms of pricing. But, somehow due to the poor infrastructure you will rarely find a family wanting to move out of a Malabar Hill or Bandra, Juhu, or Versova location. But all this will change in time. The announcement of a new International airport around Navi Mumbai will bring about better roads connecting to the city, better public transport facilities, hotels / shopping and more things to do for a family that could inspire relocating.

BULLETS POINTS

  Buyers in south Mumbai move around with budgets of Rs 12 to 15 crore for premium residential apartments offering them the lifestyle they seek

  Just like the BSE index is based upon 30 odd scrips, Mumbai's property market gets its heat from select locations

With the decrease in supply, the consumer bears the brunt of price rise or becomes victim to the super-super built up (imaginary areas) added by certain developers as a method to reap profits out of such projects