Talking About Mumbai Property Market

Mumbai, the financial capital of India, is also the most desirable destination for the real estate investors. With a population close to 19 million people, Mumbai forms one of the biggest urban clusters in the world, second only to Tokyo. The past few years have seen a continued increase in the property values and a drastic increase in the number of commercial properties. Some residential properties in Mumbai fetch the highest rates and two of its commercial properties, namely Nariman Point and Worli were among the top 10 most expensive locations in the world as per a survey conducted in 2007.

Several factors are responsible for pushing the property prices in Mumbai. The foremost factor is demand and supply. Thousands flock into Mumbai everyday in anticipation of making it big in the top MNCs and business conglomerates or the entertainment and the Indian film industry. The rate of construction and development does not match the rate of influx of people which results in rocketing realty prices. Other factors include easy availability of finance, liberalizing construction rules and the last five years have also witnessed rising income levels due to better wages resulting in huge demand for residential properties. Exponential growth in sectors like IT, entertainment, retailing and hospitality has generated an unmet demand for quality commercial spaces.

Growth over the past years: The real estate market has grown at quite an astounding rate in the past few years. The commercial property market particularly has grown at an unbelievable pace.  The Bandra Kurla complex saw the highest rates of Rs. 425 per sq ft per month which is 80 per cent more than what it fetched last year. If the Capital Value for a property in Andheri East was say Rs. 7000 per sq feet in 2006, it is now estimated to be Rs. 15000 per sq feet. As per a survey conducted in January 2008 the apartment capital values have also shown an upward trend with a starting rate of Rs. 2500 per sq feet in the Central suburbs to as high as Rs. 40000 – Rs. 60000 per sq feet in South Mumbai. Navi Mumbai is also becoming a preferred location for investors due to its planned layouts and better infrastructure.

The present state: Increase in interest rates has been a major deterrent for the boom of the realty industry across the country; however Mumbai remains more or less unaffected. This year’s budget had a minimal effect on the real estate market. The only threat posed presently is the poor performance of the stock market. The way things appear experts expect a drop of 20 – 30% in certain pockets and an overall price correction of close to 10%.

Future: Not to be threatened by such setbacks the demand for property both residential and commercial is expected to be buoyant. With the demand for property remaining intact and an increased number of NRIs planning to invest in Mumbai the construction companies will continue to reap in profits. Experts predict that the demand will be stabilized by end of 2009 by increased number of residential buildings and converting mill land into commercial spaces and the prices would then reach a plateau. Till that happens a common man’s hope of owning a house in the ‘City of Dreams’ seems to be a distant dream.