Recession had slowed down the overall growth and development of our country’s economy. Be it real estate or IT, in Mumbai or in Delhi, everything was either static or moving at a snail pace. But, the long awaited revival of real estate in Mumbai seems to have finally entered the country’s commercial capital. High value land deals are back with a bang in the city after an interval of more than a year and a half. The first quarter of this year has already seen leading property developers investing Rs 4,000 crores in half a dozen deals.
The finalizing of three large property deals has already been accomplished in Mumbai early this year. The breakthrough in Mumbai property market was brought about by these mega property deals, they are:
-The bid to develop 250-acre plot in Kharghar, Navi Mumbai is the largest of the three deals in last two years. With an investment of Rs 1,530 crore, it was won by a consortium of Bhushan Steel and Subhash Chandra’s Essel Group from the City and Industrial Development Corporation of Maharashtra (Cidco).
-Next in line are the Sheth Developers who bought Golden Tobacco Company’s property in Vile Parle for Rs 591 crores followed by the Rs 571 crores deal by the Wadhwa group to buy 18.18 acres in the Ghatkopar suburbs from Hindustan Composite.
According to sources, various mega-deals in prime areas of the state of Maharashtra are expected to be in their final stages.
-For instance, the land bought by Jet Airways in the Bandra Kurla Complex for Rs 826 crore around two years ago could be among the upcoming deals. They are close to signing a deal to sell the land in a joint development project.
-Moreover, government agencies like Railway Land Development Authority (RLDA), National Textile Corporation (NTC) and Mumbai Metropolitan Region Development Authority (MMRDA) are planning to auction their land. Despite facing setbacks in land auctions last year, these corporations have come up with the deals again.
As the hopes of realty market have restored, government agencies aim at better land deals. For instance, RLDA had managed to sell only one plot last year but is now planning to sell 25 sites, covering 172 acres. The authority hopes to raise around Rs 4,500 crore in the coming year from the auction lands.
Property consultants as well as planning and infrastructure members of railways have confirmed the improvement in overall participation from developers. They also added that RLDA has received many requests for qualification (RFQ) and expressions of interest (EoI) from well-known developers for various lands.
Similarly, even though NTC's attempt to sell its Finlay Mill in Mumbai to the Lodha group last year is yet to materialize, it is planning to sell few more defunct Mumbai mills to the leading developers.
The most important development in Mumbai real estate has been the renewed interests in its residential sector. To be precise, sales of residential spaces has outnumbered as compared to the commercial lands. After a considerable drop of around 25 to 30%, home prices have gone 15 to 20% up in the last few months as demand has returned to the residential market.
Sales of finished product homes have gone up, encouraging developers to pay higher prices to buy the land. The liquidity position of developers is certainly much better now than 18 months ago. All the developers are now focusing on building residential projects like villas, Apartments, flats in Mumbai as commercial rents have fallen sharply.
However, the revival in land deals is marked by caution this time, for e.g., (a) Wadhwa Group has pre-sold 0.5 million square feet out of 1.6 million sq ft of Ghatkopar residential project; (b) Sheth Developers is planning premium residential apartments on its newly acquired land and (c) DLF changed its plans to build an office-cum-retail complex into a high-end residential complex in Lower Parel.