Around 7,000 high-value apartments are coming up in central Mumbai over the next three years. But where are the takers?
There are approximately 7,000 apartments-each costing above Rs5crore-coming up in central Mumbai (along the Dadar-Mahalaxmi belt) over the next three years. However, there is already a huge amount of supply of approximately a million sq ft in the market for this luxury segment across the metropolis.
A number of huge real-estate players are coming up with high-value residential plots. Bombay Dyeing & Manufacturing Company Ltd is planning a mill land residential project at Dadar made up of a 38-floor upper-end residential complex spread over 35 acres and called 'Spring Mills'. It has an available developmental space of 15.30 lakh sq ft. The Lodha Group is planning 'Lodha World' of 117 floors in the Srinivas Mills compound in Lower Parel spread over 17.5 acres.
Piramal Holdings Limited is developing a project called 'Ashok Gardens' spread over 12 acres with total built-up area of 9,00,000 sq ft.
Orbit is developing 'Orbit Grand' (0.30 million sq ft) and 'Orbit Terraces' (0.08 million sq ft), both at Lower Parel. DLF has announced a residential project at Parel spread over 4.50 million sq ft. DB Realty is planning 'Orchid Crown', another high-end residential complex with proposed developmental area of 27,99,397 sq ft at Prabhadevi. K Raheja Corp is also planning to come up with a high-end residential project in Worli.
"There will be a slowdown in the tempo-which you saw in the past few months-for high-value flats as there is too much supply in Mumbai for this segment. I don't see the demand coming in so fast and easy," said Pranay Vakil, chairman, Knight Frank (India) Pvt Ltd.
The prices of these projects start from Rs32,000 per sq ft. High-value flats, starting with a price tag of Rs5 crore, had vanished from the market between 2007-2008. The slowdown saw the affordable housing segment growing.
However, during the second quarter of the last fiscal, high-value flats also reported sales. Seeing the movement in this segment, a number of developers have again started developing high-value flats around Mahalaxmi, Lower Parel, Prabhadevi and Worli in central Mumbai, which are areas where a number of corporate houses have moved in.
However, there is bound to be a slump in demand as there will be an oversupply of high-end residential properties within this restricted belt. Most of the projects being planned by various developers will be launched and completed almost simultaneously. Besides, most developers are trying to build high-rises. The cost of construction is high in such towers because of the high-quality infrastructure needed to make the project viable.
"Currently, there is a huge inventory pile-up that is not being bridged by consumer demand," said Pankaj Kapoor, founder of Liases Foras, a real-estate rating and research company.
Given the rate at which real-estate prices are shooting up, buyers are not willing to shell out exorbitant amounts. The weighted average rate of the unsold stock (as of December-end 2009) was 61% higher than the weighted average rate of the properties sold in 2008-09 (in the Mumbai Metropolitan Region), according to a study by Liases Foras. This reflects the inherent inefficiency in the market.
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