Land is scarce in Mumbai, but the city is still the dream destination for real estate investors.
IT is not exactly clear how Bombay (now Mumbai) got its name. The most popular and possible theory according to historians is that the name originated from a Portuguese phrase meaning good little bay. The Portuguese, who ruled the island city in the 16th century, discovered the bay with the natural harbour and used it for trading in the east.
The little bay has since grown into a very large bay and is now recognised all over the world as India's financial and commercial capital. The city is expanding so rapidly that the island city now constitutes only a small percentage of its area.
Geographical records show that Mumbai was once a group of seven islands, home to fishing communities. In the four centuries since the discovery of the bay by the Portuguese and its subsequent colonisation by the British, the islands became one big land mass, the present Mumbai, through a series of land reclamations.
The core area, called the island city, has the most expensive real estate in India. As a result, the city has grown far into the mainland both to the north and to the east. It is not unusual for people to commute to work for at least two hours each way every day. Yet thousands of people migrate to the city every day to seek a better living or simply to chase their dreams and aspirations.
Closing in on 14 million people (Census 2010), Mumbai is India's most populous city and the second most populous city in the world. In 2009, it was named an Alpha World City, which is a listing of the world's largest cities on the basis of population, gross domestic product (GDP), infrastructure, and so on. It is India's richest city and has the highest GDP of any city in South, West or Central Asia.
Mumbai has several draws that make it popular. The biggest is perhaps its energy, efficiency and professionalism. Be it a daily-wage labourer or a high-flying corporate honcho, the work ethic is similar. There is no time to dawdle. Time is money and money is essential to survive in this melting pot.
The ever-growing population has meant increasing pressure on the city's civic infrastructure and on housing. In recent years, the city's administration has proactively constructed flyovers and improved local railway services and the supply of water and electricity.
Historically, real estate in Mumbai has been expensive even by international standards. Predictably, affordable housing is a big issue in the megapolis. The government's attempts to address the problem have been thwarted by the lack of land area. The northward expansion of the city offers a ray of hope for the poor and the middle classes. Several private builders have launched one- and two-bedroom apartment projects, meant for the middle class in the new areas. The poor will also benefit from housing projects here under the Slum Rehabilitation Act, which allows for the development of slums if the slum dweller is given a fair share of the property.
According to an independent real estate broker, judicious use of land is aiding the construction business in general and housing in particular. Waste lands, especially dumping grounds, are utilised to build housing colonies. Furthermore, financial institutions and banks are offering loan schemes tailored to meet the requirements of various categories of people.
There are also many micro finance schemes to help economically weaker sections own property. While interest in real estate in remote suburbs such as Mira Road, Vasai and Virar is growing, it is Navi Mumbai with its plush multiplexes, good roads and affordable housing that is the new metro halt for the well-heeled and the middle classes.
A study by PricewaterhouseCoopers (PwC) and Urban Land Institute, a global non-profit education and research institute, states: India leads the pack of top real estate investment markets in Asia for 2010. The report, released in December 2009, provides an outlook on Asia-Pacific real estate investment and development trends. It states that India is a good real estate investment destination, in particular Mumbai and Delhi. Residential properties are viewed as more promising than other sectors. Mumbai, Delhi and Bangalore top the pack in the hotel buy' prospects as well.
The government has introduced many measures to unlock the potential of the sector and to meet the increasing demand. These include:
100 per cent foreign direct investment (FDI) in townships, housing, built-up infrastructure and construction of development projects through the automatic route, subject to guidelines as prescribed by the Department of Industrial Policy and Promotion (DIPP)
100 per cent FDI under the automatic route in the development of special economic zones (SEZ), subject to the provisions of the Special Economic Zones Act, 2005, and the SEZ policy of the Department of Commerce ( FDI is not yet allowed in the real estate business.)
The sky is not the limitLower Parel in the island city's central area was once known as the blue-collar workers' capital. In this area stood the big textile mills, which contributed to the growth and might of the city.
An amendment in the development laws paved the way for the sale and development of mill lands, years after the mills were closed owing to several economic issues. The mill lands were allowed to be developed on the basis of the one-third formula', that is, construction of residential and commercial buildings was allowed provided a third of the land was left as open space and another third was given to the State government to build housing for ex-mill workers.
The formula helped thousands of people procure houses. The area has seen the most growth, say real estate brokers in the high-end housing sector. About 7,000 luxury apartments worth Rs.4.7 crore each are coming up in the mill land area and may be ready for occupation in a year's time. The past six months has seen real estate giants advertising grand housing complexes in the area.
The Lodha group recently unveiled its plans to build a 117-storeyed residential tower, World One, touted as the world's tallest residential tower, on the defunct Shreeniwas Mills plot in Lower Parel. It will be a state-of-the-art complex designed by internationally renowned architects.
The group is currently developing in excess of 29 million square feet of prime real estate in 38 projects situated in and around Mumbai, making it the largest developer in the city and one of the largest in the country.
Another big player is Indiabulls. The real estate wing of this financial giant has projects that cover a total land area in excess of 10,000 acres, making it one of the largest listed real estate companies in India. Indiabulls Real Estate has plans to transform 26 million sq ft, in 16 cities, into premium quality, high-end commercial, residential and retail spaces.
In Mumbai, Indiabulls will be putting up Sky, a 65-storey iconic tower that will have private residences that offer a lifestyle unprecedented and elevated up to the sky. A part of this project is Indiabulls Sky Forest, conceived as the city's most extravagant address. This will have an 80-storeyed complex of private duplex and triplex villas and a private tropical woods.
While Lodha and Indiabulls are targeting Central Mumbai for development, the Hiranandani group is working in the suburbs, particularly in the north of the city. Hiranandani will be looking to create quality housing that includes landscaping, parks, gymnasiums, hotels, and shops. The company says it wants to create integrated townships and lifestyle patterns that provide more than just spaces to live and operate out of.
Hirco PLC, another of India's large real estate investment companies, is focussing on mixed-use township development in suburban areas outside city centres. These townships will be predominately residential and provide high-quality affordable housing for India's growing young and affluent working population.
These self-contained townships will essentially feature schools, hospitals, parks, landscaped gardens, leisure facilities, hotels, and retail outlets including exclusive shops for domestic and international brands, supermarkets, restaurants, and cafs.
Quality is the hallmark of the Tata group, which has been a great benefactor to the city of Mumbai. So when it comes to making housing available to Mumbai's denizens, the Tatas have been quick to come up with plans and solutions that cater to buyers in every income bracket.
Since its revival in 2006, Tata Housing has focussed on transforming real estate development in India. With its primary business being the development of properties in the residential, commercial and retail sectors, Tata Housing pioneered the concept of property development by corporates in India. The company also pioneered the concept of Sustainable Integrated Green Township Development, and is the only player in India today with a holistic approach to real estate development.
Tata Housing straddles all consumer segments and provides anything from value housing to luxury housing. By offering projects ranging from Rs.4 lakh to Rs.7 crore, the company has a diversified portfolio of more than 40 million square feet in various stages of development.
As part of Tata Housing's green responsibility and commitment to conservation, all properties are developed as sustainable green development under the guidance of the Indian Green Building Council (IGBC), and are certified for leadership in energy and environment design (LEED).
