Latest Property News on 'Mumbai'

Mumbai’s residential mkt shows negative growth

New Delhi: The residential market in Mumbai showed a negative growth of -9.1% during March 2011–2012, according to the latest Knight Frank Prime Global Cities Index, which compares the performance of prime sales markets across key global cities.

The value of prime property in the world’s key cities fell by 0.4% in the first quarter of 2012.

This represents the index’s first quarterly fall since the depths of the global recession. Overall, the index rose 1.4% in the 12 months to March 2012.

The prime markets in North America performed strongly with prices increasing by 7.7 % on average in the last 12 months

Nairobi (up 24%) was the strongest performer in the last 12 months while prices in Dubai (up 4%) rose the most in the last 3 months

The first three months of 2012 brought with it little new momentum. The Eurozone’s debt debacle remained at the forefront of the global economic agenda, several critical elections were on the horizon (Russia, France, Greece) and Asia’s highly-effective cooling measures showed no sign of being relaxed. Against this backdrop some luxury buyers took to the sidelines to observe their market’s trajectory.

Despite the overall index’s sluggish performance four prime markets achieved double-digit growth over a 12-month period; Nairobi, Jakarta, Miami and London. Perhaps most surprisingly is the fact that the top five performing cities were spread across four continents – North America to be the only continent to appear twice (see overleaf).

London and Singapore are proof that there is still a level of resilience in the prime markets with both cities shrugging off the introduction of new stamp duties in the first quarter of 2012.

In London both prices and applicant numbers increased despite the stamp duty rise to 7% for individuals buying homes over £2 million. In Singapore the new 10% stamp duty for foreign buyers, which was introduced in December 2011, dented demand but not prices, according to Nicholas Holt, Knight Frank’s Asia-Pacific Research Director.

In Knight Frank’s the overall index will remain subdued in 2012 fluctuating between marginal price falls and rises (with London, Moscow, Jakarta, Nairobi and Singapore expected to be the strongest performers) but it seems unlikely we are on the cusp of a new deflationary cycle in luxury global house prices.

The safe-haven argument still resonates. Capital flight will continue to focus on cities with low political risk, transparent legal systems, good security and ideally those with an HNWI-friendly tax regime.

Affordable housing to soon become reality

With Chief Minister Prithviraj Chavan approving the joint venture policy for the Maharashtra Housing and Area Development Authority (MHADA) this week, the construction of at least a lakh affordable houses is expected to take off in the peripheral areas of the Mumbai Metropolitan Region in the immediate future.

The projects are spread across Thane, Kalyan-Dombivli, Vasai-Virar, Panvel and Raigad. Officials said these projects were issued the letter of intent by MHADA almost a year ago but were stuck for lack of a formal approval from the state government.

The policy has been framed keeping in mind the urgency of generating public houses on land belonging to private landowners in view of the housing board’s own shrinking land bank.

The policy will be applicable not only in Mumbai, where the land scarcity is alarming, but also in regions such as Thane, Pune, Nagpur and Aurangabad.

Accordingly, private landowners willing to transfer the ownership of their land to MHADA will be allowed a total FSI of 2.5. This land has to be of a minimum area of 2,000 sq m. Of the total FSI, the landowner or developer will get to carry out construction of 1.75 while the remaining 0.75 FSI will be used for constructing houses for MHADA.

While the higher FSI is meant to compensate the developer for his land cost, MHADA will pay the construction cost as well as 90 per cent of the infrastructure cost to the developer.

The entire project will have to be completed within two years.

“Of the houses that are handed over to MHADA, about 60 per cent will be reserved for the economically weaker sections, low and middle income groups while the rest could be for the high income category. A state-level project management committee will be appointed to oversee the construction so that the quality of the MHADA’s share of houses is not sub-standard,” said a MHADA official.

So far, the only ongoing joint venture schemes of MHADA are on its own land. The housing board is banking on the redevelopment of its three large colonies — Patra chawl in Goregaon, Aaram Nagar in Versova and PMGP colony in Mulund — where it has entered into a joint venture with private builders.

These three ventures are expected to fetch the housing board 3,000 apartments. Due to the shortage of land, the Mumbai Board of the MHADA has been able to put up only 867 houses for sale during its annual lottery this year as against 4,000 houses each year.

The houses, starting from 15 lakh to Rs 57 lakh are located in Kurla, Malad, Powai, Borivli, Sion and Kandivli.

‘Shapoorji Pallonji, arrested man did biz’

MUMBAI: The Anti-Corruption Bureau (ACB) of the Maharashtra Police claims it has found evidence of business transactions of Rs 258 crore between real estate giant Shapoorji Pallonji Company Ltd (SPCL) and the suspended Maharashtra Housing & Area Development Authority (MHADA) deputy collector, Nitesh Thakur.

SPCL told The Indian Express that it had made payments to two companies represented by Thakur’s brother Nilesh Thakur, but the amount was less than what the ACB has claimed.

A top SPCL official said the money was paid for “land aggregation”, or arranging land for the company to develop projects in Alibaug and Pen. Recovery proceedings had been launched since the deal had not been successful, the official said.

The ACB arrested Thakur in March after raiding properties in Mumbai, Alibaug, Thane, Murud and Raigad, allegedly owned by him. The ACB alleged that Thakur owned assets hugely disproportionate to his sources of income — including large stashes of cash, jewellery and luxury cars — and had made large investments.

Home Minister R R Patil told the assembly last month that Thakur received a large sum of money from Shapoorji Pallonji, and the state would probe the reason behind the alleged payment. Patil did not mention the amount.

ACB sources told The Indian Express that investigators had found agreements, signed documents, bank account statements and cheques at properties allegedly owned by Thakur, indicating SPCL’s interest in purchasing land in Raigad district. The Rs 258 crore was allegedly received by companies floated by Thakur, some of which had his brother Nilesh as director.

The payment was allegedly made when Thakur was on unsanctioned leave for over four years from 2005. During this time, Thakur is alleged to have floated companies named Surya Roshni, Shree Constructions, Vandana Enterprises, Disha Construction, PRS Enterprise and Acecord Agro. A senior ACB official said Thakur allegedly used his clout in the revenue department to track.

Cops say papers show Shapoorji Pallonji deal with arrested MHADA office files and secure approvals for real estate projects.

The SPCL official, however, said that “all business transactions entered into by SPCL are fully compliant with the law”. The payments were made to PRS Enterprise and Acecord as “advance for land purchase”, he said. He declined to disclose the amount.

“While SPCL mandated the two companies to aggregate 900 acres of land for its projects in Alibaug and Pen, the companies could not manage to arrange even 300 acres that were meant for the first phase. Following this we have initiated recovery proceedings against PRS Enterprise and Acecord which was represented by Nilesh Thakur,” the SPCL official said.

“We were told that his brother Nitesh Thakur is no longer the deputy collector and he has resigned from the post. Nitesh even accompanied Nilesh in identifying the properties for us on a couple of occasions. We signed our first cheque in 2007, but somewhere between 2009 and 2010, we realised that the companies failed to secure 300 acres of land meant for the first phase. Nilesh also went around procuring properties which were not needed by us,” the official said.

Late last month, the case reached Bombay High Court after a PIL was filed by a former journalist, and the court issued notice to the chairman of Shapoorji Pallonji. The 147-year-old group is involved in construction, infrastructure and home appliances. In 2010, the company completed the construction of a twin skyscraper project named ‘The Imperial’ in Mumbai, said to be the tallest residential buildings in the country.

The PIL also sought to link Cyrus Mistry, chairman-designate of the Tata Group and son of Pallonji Mistry, the chairman of Shapoorji Pallonji, to the case. Shapoorji Pallonji subsequently issued a statement saying Mistry was in no way connected to the case or the petition, and that an appropriate reply would be filed in court.

ACB sources said Thakur’s movable and immovable disproportionate assets are estimated at Rs 81.42 crore. A total seven lockers were found and seized from seven of his apartments. Among his assets listed by the agency are Rs 43 crore in fixed deposits, five high-end cars including an Audi and a Land Rover, and 26 properties, including both houses and shops.

Thakur’s passport showed several trips to Dubai. Investigators are now probing a transaction that took place this year in which a Dubai-based firm allegedly paid Rs 16 crore to Thakur’s Acecord Agro.

“During questioning, Thakur asserted that the companies were floated by his brother. But his brother did not seem to have any source of income to invest between 2007 and 2010. The companies might have made legal transactions but a government employee cannot misuse his position or float companies to enter into commercial transactions,” a senior IPS officer with the ACB said.

Maha CM okays proposal to increase rental tenement size

Mumbai: In a move that may give a boost to the rental housing scheme of the Mumbai Metropolitan Region Development Authority (MMRDA), the state government has decided to increase the size of tenements under the scheme from 160 sq ft to 300 sq ft.

The scheme envisages providing small-size rental flats at affordable rates.

At a high-level meeting held late yesterday, Chief Minister Prithviraj Chavan agreed to the proposal to increase the size of the rental houses from 160 sq ft to 300 sq ft.

A committee headed by MMRDA commissioner Rahul Asthana had recommended that the size be increased.

“The state has decided to increase the carpet area of the 52,000 tenements, for which clearances have been given….

However, the size of the 37,000 flats, on which (construction) work has begun, will remain 160 sq ft”, MMRDA said in a statement.

Chavan also set up a three-member committee consisting of additional chief secretary (urban development) T C Benjamin, principal secretary (housing) Gautam Chatterjee and Asthana to consider if mega-city projects, special townships and rental/ affordable housing scheme could be amalgamated to create more housing stock, the release said.

Adarsh scam: Navy didn’t directly approach MMRDA to object OC, says Gaikwad

The naval authorities had never approached the Metropolitan Region Development Authority (MMRDA) objecting against the Occupational Cetificate (OC) issued to Adarsh Cooperative Housing, chief secretary and former metropolitan commissioner, MMRDA, Ratnakar Gaikwad has told the Adarsh Commission. The two-member panel looking into irregularities in the 31-storey building, was examining Gaikwad who had given the OC to the building in 2010 when he was with the MMRDA.

“MMRDA never received any direct representation from naval authorities for not issuing OC. The naval authorities first approached the Government… and MCGM (Municipal Corporation of Greater Mumbai) with a request to not issue OC for Adarsh,” said Gaikwad. The Navy was opposed to the issuance of OC citing security threats. Although a letter was never directly written to MMRDA, the concern was forwarded to the department by the state government. Gaikwad had replied to it saying that the naval authorities may approach Commissioner of Police, Mumbai, or the appropriate authority if it had reasonable apprehension about anti-social elements in the society.

Gaikwad, who concluded his testimony on Wedneday, had earlier told the commission that the housing society had constructed extra floors without taking due permission from authorities and penalty was subsequently levied on the society.

Gaikwad claimed he was unaware that the Ministry of Environment and Forests (MoEF) had withdrawn the state government’s proposal for Coastal Regulation Zone clearance to the plot.

Last week, MoEF director Senthil Vel had told the commission that the state government had “misinterpreted” MoEF’s letter and had taken it as the ministry’s approval for development of Adarsh plot. He said when the Ministry withdrew powers of granting CRZ II clearances from state governments in 2003, neither Adrash society nor Maharashtra government approached the MoEF for CRZ clearance.

Online application tracker to aid builders

After Chief Minister Prithviraj Chavan directed it to clear all files pertaining to building permissions within 60 days, the BMC now wants to develop an online application tracker system for builders and developers to keep a tab on their applications.

At present, builders have to approach fire brigade, storm water drainage, water and other civic departments to learn the status of no objection certificates. The CM had earlier this year directed that department officials carry out this entire procedure to cut red tape and corruption and reduce the time taken in accepting and clearing a new building permission.

Chief engineer (development plan and building proposals) Sudhir Ghate said that in order to take it forward, their department had approached the BMC’s IT Department with a proposal to create a link on the BMC’s website. “The idea is to help builders and architects know the status of their application once they have submitted all their plans and papers to BMC. This will help them know if their proposal is stuck with some department,” he said.

An official within the IT Cell of the BMC said, “Just the way in which you can track things online these days such as college admissions or status of your courier parcel, a developer will be able to track the status of his building proposal application. This will reduce direct interface between him and BMC officials and minimize chances of corruption.”

There are about 30 sub-engineers in the BMC’s building proposals department who accept proposals, send them for scrutiny and then either approve them or send out the intention of disapproval (IOD). Each of them will be given a username login to update the information regularly.

Earlier it took three months to a year for building permissions to get cleared by the building permission department, but the CM’s directive and the revised DCRs that reduce discretionary powers of the municipal commissioner have expedited the process. While earlier, about 600 proposals would be cleared in a year, as many as 100 building proposals were cleared last month alone.

Mumbai’s Lower Parel: One of the most coveted piece of real estate in the country’s financial capital hard to sell

MUMBAI: Behind the glass facade of the swanky new office buildings in Mumbai’s Lower Parel area , the light is fading. Many of these buildings, touted as the most coveted piece of real estate in the country’s financial capital, remain nearly half empty despite being ready for almost a year now.

Office rentals have now fallen to almost one-third (down 36%) of what it was three years ago. What was available for Rs 275 per sq ft three years ago is now on offer for Rs 175 per sq ft. Yet, there are few takers and, despite plunging rentals, the area is still witnessing a building boom.

Huge office complexes tower over shanties, slums and cacophonic traffic. Dozens of small shops, which used to cater to mill workers a few decades ago, are still around, sitting cheek by jowl with gleaming showrooms selling high-end furniture. Cars, bikes honking furiously clog the narrow roads, while on weekends, luxury sedans queue up to enter one of the many shopping complexes that dot the area.

The entertainment industry is doing very well, the restaurants are full and bowling alleys and dance floors are packed. But, it is the office space developers who are feeling the pinch of the economic slowdown. In the past four years, Lower Parel alone has seen launch of nine major projects, with office space of nearly 8 million sq ft, more than the entire Nariman Point, long the hub of Indian businesses. The total office space in-place at Nariman Point is 6 million sq ft, which was absorbed and used over 40 years, and till 2005 that was enough to sustain the city’s business.

Developers Offer Discounts

Now, the city has a total 85 million sq ft ready and under-construction office space. “Do we have tenants ready for this kind of supply in the shortterm ? The answer is ‘no’ ,” says Aniruddh Wahal, director – transaction services at property consultancy firm DTZ. “Certainly , not at the speed witnessed during 2005-2008 , which set the expectation for this breakneck pace of development.” Given the oversupply , developers have now lowered rentals while some are also looking at outright sales of buildings as against leasing them.

One such player is Alok Realtors, the real estate arm of Alok Industries. Alok had bought a commercial building from Peninsula Land four years ago and has been trying to sell it completely. Only around 30% of this 615,000-sq-ft ready building has been leased so far. The rest is vacant. “Developers stuck with inventory here are ready to offer big discounts to attract tenants and buyers. Some of them are even ready to negotiate the deal close their cost price,” says Ashok Kumar , MD of international property consultancy firm Cresa Partners.

Lower Parel, of course, isn’t an isolated case. Other places such as Nariman Point and Andheri are also hobbled by poor offtake , with rents falling by up to 30%. The only exception is Bandra-Kurla Complex (BKC), where rents have risen 40%, but experts say the peak may have been attained here. Key buildings that have major vacancy levels in Lower Parel are Peninsula Business Park A and B where 83% and 70% space is yet to be leased, respectively.

Marathon Futurex, of which so far only first phase is ready, also has nearly 92% vacancy, while One Indiabulls and Indiabulls Finance Centre have 15% and 30% vacancy, respectively , showed data from DTZ. Although Lower Parel’s problem may be amplified by the sheer size of the oversupply, the scenario is not very different across Mumbai . According to property brokers , between 2003 and 2005, when foreign direct investment started flowing into the economy, the demand for office space grew manifold , driving developers to build more.

Availability ratio for commercial space was at a record high of 23% in the quarter ended March 31. During this quarter, Mumbai witnessed new supply of approximately 2.65 million sq ft, taking the overall office stock in the city to over 85 million sq ft. The result: Falling rental values, but relatively stable capital values. In the quarter ended March 2012, rental values for grade ‘A’ building in Nariman Point in South Mumbai, fell from Rs 425 per sq ft three years ago to Rs 325 per sq ft a month, off its peak of Rs 450 per sq ft in 2008.

However, capital values here are still at Rs 33,000 per sq ft, not very far from peak rate of Rs 35,000 per sq ft in 2008, says a report by DTZ. “Nariman Point has actually gone down significantly from its peak level as there is no deal taking place at all. It’s a frozen market , but people are not writing it off as a ghost market yet due to its connectivity, social infrastructure and prime residences,” Wahal says.

Lower Parel’s central location advantage and availability of large mill land parcels caught the fancy of realty developers in the early part of the last decade, when the public sector National Textile Corporation began selling old mill land in the heart of the city. Rising demand for commercial space and cost arbitrage compared with expensive Nariman Point – the main office district in the city – with limited supply, fuelled a construction boom.

There was demand from both Indian and foreign companies as they sought to expand their businesses . If Mumbai was to become Shanghai, the transformation of Lower Parel into a world-class commercial hub seemed the first big step. “We have to improve the infrastructure and carrying capacity first and then allow further development , not the other way round, the way it has been done so far. Forget about being an international finance centre, even the basic needs of citizens here have not been taken care of,” says Mumbaibased urban planner Chandrashekhar Prabhu.

According to him, Mumbai scores the least in terms of amenity space with only 0.03 acre per 1,000 citizens against 12 acre in London, 17 acre in Washington D.C. and 15 acres in Moscow. The office complexes in the area are spacious, comfortable and provide everything that a business executive needs. Outside, the picture is very different. Squalid shanties, narrow roads, massive traffic jams are normal sights that greet visitors to the area. The amount spent on infrastructure is not anywhere close to the figure spent on property development.

Subhankar Mitra, head – strategic consulting (west) Jones Lang LaSalle India, says, “Since 2005, a whopping Rs 27,600 crore has been invested in land in Mumbai, excluding the confidential transactions and investments made into slum and other redevelopment projects. “Investments in mega infrastructure projects amount to only 60% of investments in prime land in the same period,” he added. “Existing roads here do not have the potential to be expanded. Pressure on infrastructure is going to be huge once all the planned development comes through and gets occupied. One will have to be very creative in handling this issue and strictly enforce regulations ,” says Pranay Vakil, chairman of Knight Frank India.

Property consultants and some developers believe that the wrong kind of oversupply has exacerbated the problem. “Unless it’s required for a corporation’s headquarters, tenants do not need large floor plates of over 50,000-60,000 sq ft for commercial office.

These kind of floor plates are good for an IT company, which typically look for space with around Rs 100 per sq ft a month kind of rentals,” says a realty developer who did not wish to be named. According to him, this is the reason why some developers who built large floor plates are now looking at reconfiguration of those with splitting them into relatively smaller offices to attract customers.

Apart from this, some developers are also offering discounts. Developers like Indiabulls Real Estate are negotiating large deals by offering discounts on the going rate of Rs 150 per sq ft for its buildings at Lower Parel. The last major deal at one of its buildings took place at Rs 125 per sq ft a month against Rs 155 a year ago.

Hubtown, erstwhile Ackruti City, recently came up with an installment scheme at three nearly completed projects in Andheri and Jogeshwari. The scheme allowed a buyer to pay 40% as initial payment and the rest at a rate of 1% interest over the next 60 months.

Santracruz-Chembur Link Road design changed yet again

After asking for four design changes in the past six years, the Central Railway (CR) has asked the agency implementing Santacruz-Chembur Link Road (SCLR) for a fresh design before it can grant permission to take the road over railway tracks. The clearance from CR is, by and large, the only major hurdle left for the SCLR, which has been under construction for nine years and is regarded as one of the most delayed projects.

The Maharashtra State Road Development Corporation (MSRDC) will submit a fresh design for the fifth time by Thursday for scrutiny by the Commissioner of Railway Safety. The alteration suggested this time is a minor one to ensure safety while construction, an MSRDC engineer said.

“We have submitted four designs till now as every time a new chief engineer came in and asked for a new design. However, we welcome the change that has been suggested this time as it is from the safety point of view,” the engineer said, adding the Commissioner of Railway Safety is likely to approve the design shortly after submission.

The Mumbai Metropolitan Region Development Authority (MMRDA), the nodal agency for the project, had first approached CR in 2006 for permission to build a 50.9-metre bridge over the main line and a 39-metre viaduct over the harbour line.

As per MSRDC engineers, the bridges were to be made with concrete slabs, but railway authorities recommended a steel bridge. Later, a second design change was suggested to increase the span or the distance between two pillars. After that, the bone of contention was the position of one pier. As per original designs, it was to be erected between two fast train corridors. The design was modified twice to change the position of the pier, which is now going to be constructed between fast train and goods train corridor.

The most recent alteration is with regards to the position of the pile cap on which the contentious pier will stand. The pile cap with a base of 1.8 metres was to be originally constructed underground, requiring digging of a trench six to seven feet deep. To avoid any impact on the adjacent tracks, the CR wants the pile cap to be above the ground.

The construction of SCLR, which will have the city’s first double-deck bridge, started in 2003 and is expected to be over by June 2013, the sixth deadline set for the project.

Building transparency plan hits a wall

The move to bring in more transparency in the civic body by putting up all building plans it has approved for public access on the BMC website has hit a hurdle and is getting a rethink. Some legal and technical challenges have cropped up, civic officials say.

Top officials in the development plan department of the BMC feel it will not be feasible for the civic body to put up each and every building plan on the website stating that architects are likely to raise copyright issues. Besides, the plans are too heavy to be all on website, they said.

In a meeting with the Maharashtra Chamber of Housing Industry (MCHI) last week, Chief Minister Prithviraj Chavan had announced that the BMC will put up all building plans approved by it on its website so that people can see them and raise objections in case there are irregularities.

A senior official of the BMC’s DP department, however, said they are consulting both the legal department and the Information Technology (IT) department before they decide to go ahead with it. “Our IT engineers told us it will be technically impossible to upload so many building plans on the website because of their huge size. And officials from the legal department said architects are likely to object to putting their detailed plans on the website. These documents are not exactly confidential in nature, but are not necessarily public documents either. At present, RTIs are filed by those who want details of building plans. The same can be continued,” he said.

The building plan includes detailed architectural drawings and these files are generally heavy. Putting them online is one of the many recent initiatives by the BMC to usher in transparency. The other such plan is to put up work orders issued by the BMC across its offices and departments so that citizens can check what works have been approved .

MHADA lottery: 3,526 applications for 867 houses

Within days of starting the online application process for its affordable houses, the Mumbai Board of the Maharashtra Housing and Area Development Authority (MHADA) has received four times as many applications as the number of houses available in Mumbai.
The housing board started its annual lottery process on Thursday whereby prospective home buyers can apply through the MHADA website. Despite a major snag which rendered the website inaccessible most of the time initially, the Mumbai Board has so far already received 7,831 applications for its 867 houses across the city.

In comparison, MHADA’s Konkan Board, which has released 1,726 homes in Mira road, has received only 2,453 forms till date. “There was a glitch in the website set up for the lottery process due to which we had to shift operations to our website www.mhada.org . Due to the snag on the first day, we received only 86 and 26 applications for Mumbai and Mira Road respectively,” a MHADA official said.

The numbers are expected to increase as the online submission process will go on till May 24. The lowest range of MHADA houses starts from Rs 15 lakh in Kurla and 19 lakh in Malad for 200 sq ft plus apartments meant for the low income groups.

Even the most expensive 700 sq ft plus two bedroom apartments for high income groups costs Rs 55 lakh in Powai and Rs 57 lakh in Borivli, which is far below the market price of such houses. In comparison, data of under-construction and ready-to-move-in houses by private developers in Mumbai shows that the least expensive house in Mumbai costs Rs 60 lakh while the price of an average house is as high as Rs 2.18 crore.

Officials say that there seems to be no decrease in the number of applications this year despite the fact that the number of houses released by the Mumbai Board are only a forth of the usual numbers. Last year, 4,034 MHADA houses had over 1.30 lakh applicants vying for it while the year before 3.28 lakh applicants had applied for the 3,449 houses on sale.