Bangalore: After more than a year, south Mumbai, India’s most expensive real estate destination, may see a revival this year as developers gear up to launch projects and resurrect stalled construction on hopes that demand will return, prices stabilize and approvals come trickling in after a long hiatus.
In the last year or so, suburban Mumbai has majorly contributed to sales, as high property prices, few launches and slow project approvals crippled the property market in the south.
Post several months of slackness, Mumbai registration data sprung up a positive surprise, with a sharp 42% monthly growth, reflecting the impact of the festive season, brokerage Prabhudas Lilladher Pvt. Ltd said in a 24 January report.
Sales registrations in December was the highest in 24 months. However, the jump in sales was largely from suburban Mumbai, which grew 51% month-on-month, while south Mumbai sales actually declined 1%, reflecting stressed affordability, the analysts said.
It might change this year, developers and property analysts say. Prices have declined by 5-15% in south Mumbai in the past 18 months or so, as sales slowed in the luxury segment.
Runwal Group plans to launch 40 luxury residences in Nepean Sea Road in a month on a sea-facing bungalow property it bought in 2011 and is converted into a residential tower. A three bedroom-hall-kitchen (BHK) will cost around Rs.25 crore and a four BHK Rs.35-40 crore.
“It’s a good time to launch. The market looks better than what it was last year, demand is up and new launches are happening at prices little lower than two years back,” said Sandeep Runwal, director, Runwal Group.
Developers and landowners are negotiating openly on many old buildings and plots, both of which throw open redevelopment opportunities.
Sanjay Dutt, executive managing director at property advisory Cushman and Wakefield (South Asia), said developers are still paying a lot of money to acquire land or properties that may be redeveloped. “However, some factors that were in not favour include the building and environment approvals and financial health of developers that seem to be getting better now,” said Dutt.
In an analyst call after its third-quarter results in February, the management of Orbit Corp. Ltd indicated the worst seemed to be over. The firm, which focuses on projects in south Mumbai, is now gearing up for fresh launches after quite a while.
Orbit plans to launch Orbit Bloom at Kemps Corner in Mumbai at Rs.70,000-80,000 a sq. ft, and shortly restart work on another project in Naepean Se Road, Orbit Haven, as the final approvals are coming in.
The developer also plans to launch Villa Orb Annexe in Naepean Se Roadwith apartments priced at Rs.75-80 crore each in a few months.
“The project was pre-launched and a few apartments sold more than a year back, and then took a break for the remaining approvals to arrive,” said Pujit Agarwal, managing director, Orbit Corp.
Prabhudas Lilladher in another report in January said Mumbai-based Peninsula Land Ltd will launch three south Mumbai projects over the next two quarters. “All three, being at excellent locations, are likely to generate a strong response,” said analysts Kejal Mehta and Pratik Shah in the note.
Peninsula Land didn’t respond to calls or reply to an email query.
Piramal Realty Pvt. Ltd, an Ajay Piramal Group company, will launch its Mafatlal mill project in two months, managing director Khushru Jijina said. Piramal Realty bought the 7-acre land parcel that housed the erstwhile Mafatlal cotton textile mill in Byculla in 2011.
While signs of a pickup in the sector are evident, property analysts said pricing and project formats will be key for sales, particularly in developments that are a rung lower than the crème-de-la-crème projects of Malabar Hill, Altamount Road and Carmicheal Road.
Project launches in the eastern corridor of south Mumbai, in areas such as Byculla, Sewri or Wadala, will do well if priced properly and compete with high-end projects in suburban Goregaon, Malad and Mulund, said Pankaj Kapoor, managing director, Liases Foras Real Estate Rating and Research Pvt. Ltd.
“However, the strategy of building studio and small apartments and selling at above Rs.20,000 a sq. ft to reduce overall ticket size has clearly not worked for developers in the last couple of years,” he said. “The product has to be superior and match the high price in these new projects.”