Delhi & Mumbai – Realty Hubs
Real estate in India is dominated by the markets in Delhi-NCR (National Capital Region) and Mumbai- MMR (Metropolitan Region). Shubhra Saini talks to few developers of both the cities.
Mumbai is India’s most populated city with over 18.4 million people whereas in terms of urban sprawl, Delhi -NCR is much bigger than Mumbai including MMR. Also, Delhi-NCR enjoys more developed infrastructure than Mumbai such as Noida Expressway and Dwarka Expressway and better rapid transit system within the city. Mumbai MMR still largely depends on local trains for transportation and infrastructure development is steady but slow to come by. However, Delhi is landlocked whereas Mumbai boasts a long coastline. Mumbai’s surrounds are therefore likely to beckon more the manufacturing and export-oriented industries than Delhi.
Also, Mumbai continue to come up with more luxury and super luxury properties than Delhi further boosted by re-development and slum rehabilitation schemes in South and Central Mumbai. Evidently, the property prices are higher in most Mumbai MMR as compared to NCR. Only Gurgaon and some posh localities Delhi have the same entry level price as Mumbai. Scarcity of land is the main reason that the real-estate development in Mumbai is vertical in nature. Delhi-NCR though plotted development still abounds, tall commercial are residential buildings are coming up in Gurugram towers.
With markets undergoing re-correction and developers concentrating on consolidation rather than expansion, the real-estate markets of both Delhi & Mumbai are getting streamlined. Developers are hopeful that couple of quarters from now, sheen will return back to the realty sector.
The unsold real-estate inventories will take another 52 months to be cleared in Mumbai and about 62 months for Delhi market, according to Anarock Property Consultants.
Mumbai- MMR Realty
Mumbai is called the city of dreams. The financial capital of the country offers job opportunities for the countless who flock to the city for better quality of life. This makes the land starved metro also the most expensive housing market. According to the census report, population of Mumbai has increased by 93 % in last 100 years, clearly indicating that demand in Mumbai will always outstrip the supply. But with the infrastructure development in MMR comprising Navi Mumbai, Thane and Powai, there seems some hope for buyers.
Kolte-Patil Developers Ltd. is Pune’s largest developer and is also present in Mumbai with some upscale redevelopment projects. Gopal Sarda, CEO, Kolte Patil, talking about the regulatory changes and how real estate has emerged out to be stronger said, “Home-buying is never going to stop. Real-estate is the only industry which is not perishable. Post RERA the customer confidence will increase in the long run as it brings in transparency and with GST more individuals will come under the taxation ambit. In addition, the lowering interest rates on home loans and ease of finance for developers for affordable housing given the industry status accorded to it will help resurrect realty sector.
Ruparel Realty has been constructing numerous residential & commercial projects across Mumbai. Amit Ruparel, Managing Director, Ruparel Realty shares his views, “The MMR region (Thane and Navi Mumbai) has seen an increased supply in inventory, and it is equally matched by the demand. Home loans have become more affordable, which is encouraging more people to invest in their own homes. Although the realty sector did face a slump and is yet to recover, certain suburbs are doing well. Builders with good projects and those who ensure sustainable operations, will weather the storm. Residential demand is expected to pick up towards the end of 2017. The recovery will be sustainable and based on much sounder market fundamentals than transient sentiment.”
Briefing on their own business model that was aligned to the specific characteristics of Mumbai city, Sarda explained, Mumbai is more investor driven market but in last few years with hardly any appreciations in the property values due to various factors, end users can buy a home at five year old rates as well as discounts and freebies from developers. When we forayed in the Mumbai market about three years back, we realized that the asset light model would work best given the high land prices in the city. Company has undertaken redevelopment projects in various prime localities in Mumbai. The capital deployment in these projects is linked to approvals and project specific timelines and the focus is to keep down the working capital cycle and quick turnover.”
Another Mumbai based developer Rustomjee with a special focus on the Mumbai Metropolitan Region aims to add another 13 million square feet to its portfolio of commercial and residential in the next five years. Talking about the new buying patterns among Mumbai customers, Kaizad Hateria, Brand Custodian and Chief Customer Delight Officer, Rustomjee Group stated, “Mumbai is witnessing a shift towards gated communities among buyers. The homebuyers prefer an element of community living, social spaces for family and themselves and security and lifestyle features.”
Recent data indicates that demand has increased significantly toward projects with smaller configurations, given their affordable ticket size. Developers are redesigning and repositioning their projects targeting the lower and middle income segment, where the biggest market demand is for housing. In order to make the Government’s vision of housing for all a reality, there has been an evolution within the industry. Developers are going back to building 1-BHK homes and some are creating posh studio apartments for the upwardly mobile customers.
Mumbai has emerged as the most stable commercial real-estate market from net absorption perspective in 2017 registering a total of 2 million sq. ft. so far this year.
Mumbai commercial real-estate has fared better than the residential segment due to the steady demand from IT/BPO, consulting, BFSI, healthcare and media industries that have been looking at setting up their offices in the financial hub of the country. However, the supply for office space has been greatly constricted in Mumbai. As Hateria elaborated, “Entrepreneurs and start-ups are more interested in small floor plate sizes while, the bigger office floor areas are being occupied by multinational and Indian conglomerates. The demand for commercial development will get further boost as more REITs are introduced.”
Organised retail shows the maximum potential to grow in Mumbai as the city has the largest stock and upcoming supply of office space and remains most attractive for migrants. From the infrastructure perspective, all parts of Mumbai are well connected which benefits the retail industry by providing better supply chains.
Delhi- NCR Market
Delhi-NCR mainly comprises of Delhi, Gurgaon, Noida, Faridabad and Ghaziabad.. Despite being one of the biggest real-estate markets in India, it is the most unstable of all the metros and worst impacted by demonetization, RERA and GST.
As per Knight Frank India, housing sales fell 26% in Delhi-NCR in the first half of 2017. This is despite the 20% price correction in the past 18 months. Commenting about the same, Pradeep Aggarwal, Chairman – Signature Global India & National Affordable Housing Council – ASSOCHAM, said, “Developers have realised the hard way that the real-estate sector is a customer driven market and the customer today demands reasonably priced housing. In metros, the trend is now of vertical development that offers more units in a given land parcel and the transit oriented development that addresses the commuting problems of the citizens. Also, Gurugram is the hub for employment opportunities thereby attracting workforce and demand for ample amount of affordable housing.” Signature Global has presence in Gurugram, Karnal and Ghaziabad. As per Aggarwal, their company has launched over 10,000 units of affordable housing in northern India including NCR’s first affordable housing project by the name of Signature Global Solera in Sector – 107, Gurugram.
Like Mumbai, in Delhi-NCR too, Transit-Oriented Development (TOD), also known as the Mixed-Use Model is slowly but steadily gaining popularity. The main drivers for such developments are Delhi’s air and noise pollution, shortage of water supply and traffic congestion. Pacific India with residential footprint in Dehradun and Moradabad is developing large sale residential developments.
The TOD model of community development entails developing housing as well as business spaces, including retail, entertainment, boutiques, restaurants, household or professional services, consumer goods, and healthcare facilities within a walk able neighbourhood. Abhishek Bansal, Executive Director, Pacific India, said, “The urban development authorities are encouraging mixed use townships that combine residential, cultural, retail and commercial establishments for a more sustainable city infrastructure.”
For the middle-income segment, New Gurgaon –area near Kherki Dhaula, Dwarka and Noida are the favourite destinations primarily because of the affordable prices and reasonably good connectivity with other parts of the city.
Dwarka, Kalkaji, Vikaspuri, Defence Colony and Chhatarpur, the prominent localities in the capital and Gurugram have seen some price improvement. Buyers are showing interest in Sector-137 and Sector-78 in Noida for ready-to-move-in options but properties along NH-8 and Dwarka Expressway have seen a dip in prices.
Karnal is being touted as the new NCR town due to its proximity to Delhi and leverage of its Knowledge-based enterprises and Start-up activities that are creating new employment opportunities and improving its infrastructure. Bhiwadi also is the next big-real estate investment opportunity in Delhi-NCR as it is just 40 km from Millennium city Gurugram and sits on the Delhi-Mumbai Industrial corridor.
“There is no denial to the fact that the Delhi NCR’s real estate continued to remain fraught with constant stockpile of housing units. But, it is now slowly moving towards recovery. The focus on affordable housing and the impetus provided to the real-estate sector will definitely translate into opportunities for the residential market,” opined Nayan Raheja, Executive Director, Raheja Developers, the real-estate company that enjoys strong presence in NCR since 1990.
According to the quarterly industry report in May this year, 22% of Delhi’s localities witnessed an upward trend followed by 26% in Ghaziabad, 27% in Gurgaon, 37% in Noida and 41% in Greater Noida.
The commercial real-estate in Delhi witnessed an overall absorption of 0.26 million sq ft in Q3 2017. And about 3.0 million sq ft of new supply is likely to be completed over the next three years. The dearth of grade-A supply has ensured high demand. In Gurugram due to continuous addition of new supply, the commercial space market remains stable. The overall vacancy remains high around 28%. The demand in Noida is concentrated in the institutional and industrial Sectors 62 to 65 and Noida Expressway and is driven by tenants looking for large floor plates at affordable rents.
Delhi-NCR is a relatively more matured retail market than Mumbai. In terms of geographical area, Delhi is much bigger and there are quite a few areas that are under-served by organised retail space, which contributes to the retail market potential of the city.
Although Delhi-NCR and Mumbai MMR continue to consist the lion’s share in the Indian realty market, increased urbanisation has changed the realty scenario in other cities. What’s interesting to note is that according to the research reports by CBRE and Outlook, the bulk of sales in 2017 first quarter were not in the prime metros of Mumbai-MMR and Delhi-NCR but in cities such as Chennai, Kolkata, Hyderabad, Bengaluru and Pune. Developed infrastructure, connectivity, expanding economic activities along with favourable government policies and availability of affordable and mid-segment housing are the factors driving this interesting trend.