Latest Property News on 'Mumbai'

‘Mumbai property prices spike 3.2%’

There is bad news for prospective home buyers who have been waiting for a price correction to take place to book their dream homes.
A report released by Jones Lang LaSalle (JLL), a global leading real estate services firm, noted that residential rates in the city have once again begun to grow steadily after a prolonged phase of stagnation.

The report said that property prices in Mumbai have gone up by 3.2 per cent in the last three months. This is the highest quarterly rise seen since January 2011 when quarter on quarter rates had increased by a mere 0.8 per cent continuing its sluggish growth over the next three quarters.

The report predicts that prices are likely to go up further. Figures show that unlike the one-year period since July 2008 when property prices in Mumbai had shown negative growth in the wake of the slowdown, this time around prices would increase, but not in a meteoric manner.

“There has been a nine-month waiting period during which consumers expected a price correction to take place. However, builders were able to generate cash flows by selling one or two units at discounted rates through across-the-table negotiations and then they continued sitting on to their price points,” said Ashutosh Limaye, explaining why Mumbai never saw an across the board price correction despite the sales velocity being on the wane.

He added that not only have prices increased, but absorption rates too have picked up between January and March this year.

“A correction is now unlikely. Prices might fall only in areas beyond Kalyan or Vasai-Virar where large townships offering hundreds of flats have come up. In these cases, the large inventory may exert a downward pressure on prices,” Limaye said.

On a nation-wide level, the JLL data shows that residential prices have increased by 29 per cent since the last trough seen in June 2009.

No nod, Adarsh illegal: MoEF to probe panel

The Adarsh housing society does not have any clearance from the Central environment ministry, and the construction of the building is therefore illegal, the director of the ministry told the Adarsh commission looking into the controversy on Thursday.
The statement has brought the issue of environmental violations in the society to prominence, barely two weeks after the issue of ownership of the land reached a degree of closure with the commission’s report holding that it belongs to the state government.

“There was no clearance given by the Ministry of Environment and Forests (MoEF) for development of the plot of the Adarsh society at any time. Therefore, in the absence of such clearance, the construction of the building is illegal,” A Senthil Vel, the present MoEF director, told the two-member panel. Vel also deposed about the legality of transferring Floor Space Index (FSI) from the adjoining BEST plot to the society. “If the original plot has already consumed the FSI of the very plot as existing on 19/2/1991 (the date of issuing the then Coastal Regulation Zone notification), no further FSI of any other plot can be utilised or loaded, “ Vel said, during questioning by the senior counsel for the commission Dipan Merchant.

Vel’s claim could run contrary to a statement made in this regard by Subodh Kumar, who till recently was the Brihanmumbai Municipal Corporation commissioner. Kumar had told the commission that such transfer of FSI is possible if the two plots in question are amalgamated.

During his deposition on Wednesday, Vel noted that a letter sent by him to the state government cannot be construed as an NOC from the CRZ point of view. The letter, sent to the deputy secretary to the state urban development department, had said that construction on the project should be taken up as per the prevailing CRZ norms.

He had also told the panel on Wednesday that neither the society nor the state government had made any application for CRZ clearance to the ministry.

Mahindras to build affordable houses in Maharashtra, TN

The Rs 80,000-crore Mahindra Group is to foray into affordable housing this year to tap demand for such homes.

Currently, Mahindra Lifespaces, its property development arm and known for its World City projects in Chennai and Jaipur, is finalising land parcels in Maharashtra and Tamil Nadu. “We have got a go-ahead from the management and appointed architects. We are in the process of getting the land within the company by next month,” said Anita Arjundas, managing director and chief executive officer.

Each project will have 1,000 to 2,000 units spread over 10 acres. A home is to be priced between Rs 7 lakh and Rs 15 lakh.
When the company launches such a project, it would join the ranks of Tata Housing, Usha Martin Group and Jerry Rao’s Value and Budget Housing Corporation, all of which have launched similarly priced ones.

“It (Mahindra’s entry into affordable housing) is good. I have always maintained that more credible players should enter the market, as demand is good. There is a continuous shortfall in the space. More numbers of private players are always welcome,” said Brotin Banerjee, managing director, Tata Housing Development Company. They’ve launched low-cost housing under a ‘Shubh Gruha’ brand, at Bhoisar and Vasind, 80 km from this city.

Adds Pranay Vakil, chairman of global property consultant Knight Frank, “Many companies have realised this is the need of the hour. They are willing to live with the low margins and large volumes. A lot the corporates backing these developers have also created large employee housing. They think if they have done it for themselves, they can also do it for others.”

Currently, Mahindra Lifespaces sells houses in the price bracket of Rs 50 lakh to Rs 1 crore, in markets other than Mumbai. It is also looking at launching projects in Hyderabad, Pune and Ghatkopar in this city over 2012-13, and is awaiting approvals and acquiring land for the second stage of its Chennai project. Currently, it is developing four million sq ft of properties.

“If you have good location, the pricing is right and people see the project on the ground, then buyers get confidence to buy,” Arjundas said.

In Nagpur, where the company released 20 per cent of the stock in the fourth quarter, it sold half of this in 45 days, she said. “We would like to build three years of inventory in the next 18 months,” Arjundas added.

The MD said the company had not seen any slowing in property sales. It did sell less in 2011-12, compared to the previous year (Rs 590 crore, compared to Rs 700 crore), but this was due to delay in getting approvals. “We were awaiting approvals in many projects. Otherwise, we are sold out in Mumbai, Pune and the NCR (National Capital Region, in and around Delhi),” she said.

Arjundas said the company would use a combination of debt and a joint development model to keep investment light. The debt to equity ratio is 0.56; debt is Rs 600 crore on a consolidated basis. “We do not want to inflate our books, which we are not comfortable with,” she said.

The company announced results on Friday and saw an increase of five per cent in its profit after tax at Rs 32 crore in the fourth quarter of 2011-12, as against Rs 30.5 crore in the corresponding quarter of 2010-11.

Rental housing projects stuck since Sept

The State Level Expert Appraisal Committee (SEAC) has either rejected or put on hold all rental housing proposals placed before it for the mandatory green nod, citing the massive density arising out of the very nature of such mass housing projects.

The panel has, in fact, not approved a single rental housing proposal since its first meeting in September 2011. According to town planning norms, the ideal density is 400 tenements per hectare. This means that a maximum of 400 families can live over an area of one hectare without bearing down on the infrastructure such as open spaces, roads or amenities such as transport, water supply and sewerage. Most projects before the SEAC exceed the ideal tenement density by as much as five to 15 times.

In its last meeting, the panel denied environment clearance to two projects near Panvel — the 16-acre Arihant Akanksha and 28-acre Indiabulls Greens — for having a density of up to 2,000 houses per hectare. Also pending before the panel are similar high-density projects by Darvesh Properties in Mahajanwadi (Thane), Pranshu Developers in Nilje village (Kalyan), Dhariwal builders at Kolke village (Panvel), a project each by Square Feet Builders and Dosti Friends Development Corporation at Manpada (Thane), among several others.

The rental housing policy of the Mumbai Metropolitan Region Development Authority (MMRDA) allows a total FSI (ratio of built-up area to plot area) of four. Of this, builders have to hand over construction equal to an FSI of one to the MMRDA and instead they get to utilise the remaining FSI of three for their sale component. However, many of these projects have tweaked norms to consume a total FSI of as high as six to eight.

A SEAC member, who didn’t wish to be named, said the ambitious rental housing scheme will end up denting the infrastructure and environment. “The size of the houses is inversely proportionate to the density, as smaller the apartments in a building the more families it can accommodate. The rental housing buildings with houses as tiny as 160 sq ft and the builder’s sale component with its high FSI are together bound to put a great strain on services,” said the member. He added that while the earlier SEAC cleared 12 rental housing proposals before September 2011, the present panel hasn’t approved any.

“We have no option but to ask the MMRDA to reduce the density to less than 1,000 houses per hectare by increasing the size of the rental units. This may decrease the number of units available for mass housing, but this is the only environmentally sustainable option before us,” he said. MMRDA sources said a policy on increasing the size of the rental units is awaiting the Chief Minister’s approval.

Of two proposals that have been rejected, the Arihant project is in Palaspe village near Panvel and will have 6,500 apartments in over 24 highrises. The recreation ground, partly on a podium, would be merely about eight per cent of the plot area. In case of the Indiabulls projects, there would be 30 towers with almost 10,000 apartments in Kon and Arivali village near Panvel.

As in the case of most rental housing projects proposed in the peripheral areas of the MMR, the panel has noted that: “Such high density will cause serious health hazards due to lack of adequate open spaces, lighting and ventilation and living conditions. Even in slum development schemes, the tenement density seldom exceeds around 1,200 tenements per hectare. In rural areas and areas not yet developed, it will have to be substantially less.”

The SEAC has also raised serious concerns about the burden on the feeble rural infrastructure where municipal services as well as amenities like hospitals, schools, market, fire station and police station are not developed yet.

Speed up approval process for housing projects: Chamber to CM

Distressed by slowing property sales, the Maharashtra Chamber of Housing Industry (MCHI) has requested the state government to speed up approval process especially for affordable housing projects.

With the realty market in a slump, developers are once again turning to affordable housing projects that have a greater demand against luxury projects. Luxury projects witness a good absorption rate only during a realty boom. Chamber representatives met Chief Minister Prithviraj Chavan and asked the state government to come up with a policy framework for the creation of affordable housing projects soon.

In April 2010, the MCHI had inked a deal with the Ashok Chavan government for generating 5 lakh affordable houses in the Mumbai Metropolitan Region (MMR) over five years. Two years on, the government still does not have a policy for the creation of affordable houses. Even a Central government policy mandating developers to reserve an additional 20 per cent houses on their plots for the sake of public housing has been put on hold for the time being.

A senior state government official said following the interaction with the chief minister, the government will soon call for a meeting to discuss the problems with regards to rental housing projects. “We will also convene a meeting to decide on speedy building permissions process. The association has also been asking the government to raise the height of buildings requiring permission from the high-rise committee from the existing 70 m to 120 m. The rationale behind their request will have to be looked into before taking any decision,” said the official.

Other issues discussed include 600-odd proposals pending before the State-Level Expert Appraisal Committee and easier civil aviation clearance. “We have asked that there should be a 60-day building permission approval system in case of all urban local bodies in Maharashtra. The CM has promised to look into all these issues over the next few months,” said Paras Gundecha, president, MCHI. The MCHI said that if the urban local bodies fail to give approval within 90 days, there has to be a provision for appeal to a panel formed for this purpose.

“Under the existing rules, there is a provision for deemed permission if the building permissions aren’t granted within 60 days. But developers do not opt for it as banks refuse to sanction loans unless permission is obtained in written,” the official said.

Apply online for MHADA houses from today

The Maharashtra Housing and Area Development Authority (MHADA) will on Thursday start its online application process for sale of 2,593 houses as part of its annual draw for affordable homes.

However, the number of houses has dropped to merely a fourth of those available in the preceding years. This year, the Mumbai Board of MHADA has 867 homes within the municipal limits of Mumbai. The remaining 1,726 houses have been constructed by the Konkan board in Mira Road area, for the economically weaker sections (EWS) and low income groups (LIG).

“Forms completely filled will be accepted on the MHADA website till May 24 and the draw will be held on May 31,” said a MHADA official. Of the houses available in Mumbai, 461 houses in Charkop (Kandivli), Malvani (Malad) and Vinobha Bhave Nagar (Kurla) are reserved for LIG, 234 apartments in Kurla, Sion and Kandivli for middle income group (MIG) and 172 houses in Powai as well as Gorai and Magathane in Borivli for high income group (HIG). As per revised MHADA rules, those drawing a basic salary of Rs 8,000 are categorised as EWS, between Rs 8,000 and Rs 20,000 as LIG, between Rs 20,000 and Rs 40,000 as MIG and above Rs 40,000 as HIG.

Officials said the number of houses available in subsequent years are expected to drop further with the housing authority left with only two hectares of land. MHADA had made it compulsory for builders redeveloping the existing 105 MHADA colonies to hand over a certain percentage of reconstructed flats to the housing board instead of paying a premium. However, following protests from builders, officials admit that they may have to tweak the policy.

Delhi sells its homes faster than Mumbai

Mumbai: Mumbai may be second to Delhi in unsold homes, but it will take longer to sell them. Real estate developers in the financial capital must wait over three years to clear 1.13 lakh units or 120 million sq ft as high prices deter potential buyers, shows a study released by Liases Foras, a real estate rating and research consultant.

The study covers units in Mumbai Metropolitan Region (MMR) — including Mumbai city, Thane, Kalyan and Navi Mumbai — National Capital Region in Delhi, Pune, Hyderabad, Bangalore and Chennai.

NCR, with 232.57 million square feet or 1.60 lakh units of unsold homes — roughly double Mumbai’s —will likely sell homes much faster, in 23 months.

“The NCR market is primarily an investor market and has very little comparison with Mumbai,” says Om Ahuja, chief executive officer (residential services) at Jones Lang LaSalle India. “The real estate market in areas like Gurgaon or Noida attracts a lot of money from neighbouring states like Punjab, UP and Delhi as people invest in residential properties.”

Among the six metros, Pune homes will be sold the fastest, taking just 14 months to sell its 43.06 m sq ft at the current pace of buying. A steep rise in interest rates in the last 18 months was seen as the key reason for low sales as buyers try to avoid high home loan instalments.

The Reserve Bank of India cut key rates by 50 basis points last month, forcing lenders to lower their retail lending rates which could push sales.

“The reason for slow sales in Mumbai is the pricing of property in the city,” says Pankaj Kapoor, founder, Liases Foras. “Pune, which is closer to the Mumbai market, sees higher sales in residential units despite having just half the units Mumbai built. High costs paid for land in Mumbai, coupled with rising construction costs has skewed the pricing landscape which is affecting sales,” says Kapoor.

In Mumbai, demand for under-construction homes has fallen significantly. “Residential absorption in Mumbai at 33 million sq ft a year is now at its lowest since November 2009,” says a report from Standard Chartered released on April 23.

The Liases Foras report says that Bangalore with 71.29 million sq ft and Chennai 42.75 million sq ft of unsold homes will be cleared off in 20 months. But Hyderabad may take 38 months to sell 33.82 million sq ft residential units as political unrest in the city pulls down sentiment.

“There is a lot of upsurge in demand for residential property in cities like Pune, Chennai, Bangalore and Hyderabad because of affordability and jobs creation,” says JLL’s Ahuja.

Real estate trade bodies – Maharashtra Chamber of Housing Industry (MCHI) and the Confederation of Real Estate Associations of India (CREDAI) – blame the longer time to get government approvals and high property prices to slow sales in Mumbai.

“If the government brings down the project clearance time, it will help developers save on input and interest costs which will be eventually passed on to the consumers,” says Boman R Irani, chairman and managing director, Rustomjee, Mumbai-based real estate developer and secretary of MCHI-CREDAI.

“With ongoing delays in the approval process, around 16-18 million square feet of residential space is stuck every year in MMR,” says Vyomesh Shah, managing director, Hubtown, real estate developer. According to MCHI-CREDAI, there are nearly 500 projects await just environment clearance.

Maharashtra plans low-cost houses for Mumbai mill workers

MUMBAI: As Maharashtra turned 52 Tuesday, the government said it would provide low-cost housing to mill workers and free houses to kin of mill workers who died during struggle for a state for Marathi-speaking people.

“The government has decided to provide 6,948 houses to mill workers at reduced and affordable rates, at Rs.7,50,000 in multi-storeyed buildings. The government will also give free houses to the survivors of the mill workers who lost their lives in the Samyukta Maharashtra Movement,” Governor K. Sankaranarayanan said at a function held to mark the state’s 52nd anniversary here.

He spoke about the government’s initiatives and said the drought in the state was being tackled on war footing.

the governor said the state soon would have national investment and manufacturing zones, a youth and sports policy and a sports university.

He also spoke about the new Maharashtra Housing (Regulation & Development) Act, 2012.

Maharashtra’s 52nd anniversary coincides with the birth centenary of the state’s first chief minister Y.B. Chavan and the International Labour Day or May Day.

Chief Minister Prithviraj Chavan, Deputy Chief Minister Ajit Pawar and other ministers attended the function.

They also paid floral tributes at Hutatma Chowk, a martyrs’ memorial in south Mumbai – a monument raised in memory of those people who died during the 1950s movement demanding that a state for Marathi-speaking people be carved out from the State of Bombay and incorporate all neighbouring Marathi-speaking regions.

1500 MMRDA flats almost ready but no decision on allocation

Even as the first set of 1,500 houses for the Mumbai Metropolitan Region Development Authority’s (MMRDA) ambitious rental housing project is set to be ready in the next two months after a long delay, the development authority is still clueless about how to allocate these units.

The MMRDA still lacks clarity on whether to let these houses out on a rental basis as planned or to sell most as affordable housing units and hand over the rest to various government departments and urban local bodies. If houses are to be sold at affordable rates instead of being rented out, there is no clarity on whether the MMRDA should resort to a lottery system or sell them in the open market.

“Till we decide on how to allocate the houses and actually finish the distribution, the MMRDA will have to take responsibility for these houses, pay for their maintenance, water and electricity and security, which is unnecessarily going to be a costly affair,” said Anil Wankhede, Deputy Metropolitan Commissioner and in charge of MMRDA’s lands cell.

The 1,500 houses have been constructed by the Dosti Group on Pokharan Road in Thane and would be handed over to the MMRDA in June. “We are still awaiting the state government’s nod on the changes a committee constituted to review the rental housing scheme had proposed. Till we get a go-ahead, we can’t decide on how to allocate these tenements,” said Uma Adusumilli, chief of MMRDA’s rental housing cell.

The rental housing scheme was launched in 2008 to check the proliferation of slums in the Mumbai Metropolitan Region with the construction of 160 square feet houses with rentals ranging from Rs 800 to Rs 1,400. The MMRDA had set a target of having five lakh units ready in five years. However, nearly four years later, only 1,500 houses will be ready.

Earlier, a committee under the chairmanship of Metropolitan Commissioner Rahul Asthana had submitted recommendations to the state government, suggesting the nature of the project be changed to affordable housing and just 15 per cent of the total lot be let out on rent. A certain percentage, between 15 to 25, could be given to different urban local bodies and another 10 per cent could be given on sale to government institutions so that they can let out the tenements to their employees. “There has been a delay in giving an approval to the recommendations due to the Assembly session.We hope to hear from the state soon,” Asthana said.

Commercial realty in Mumbai offers big opportunities

The number of high net worth investors (HNIs) and corporates seriously looking to invest in Indian office space has increased manifold in the last few years. Mumbai continues as India’s numero uno office space investment destination, with companies from all over the world unerringly zeroing in on the financial capital.

As South Asia’s only true financial hub, Mumbai is among India’s best places to invest in commercial real estate. In times of global economic uncertainty, investors flock to markets that have consistently proved their long-term stability and fundamentals.

In a scenario wherein institutional investors are showing reduced preference for commercial real estate in their portfolios, Mumbai continues to present HNI and corporate investors with myriad growth opportunities in office properties. However, the multitude of options also gives many enthusiastic investors heartburn -where on Mumbai’s vast and complex map are the low-risk/high returns locations?

Today, Mumbai as a city for commercial space investment reveals a high rate of vacancies in many locations. The rental yields in these micro-locations are expected to decrease marginally over the next 12 months.

While this seems to present a depressing scenario on the surface, the fact is that we are now looking at the bottom of the curve. In other words, these markets are expected to bottom out over the next one year and will consequently start to move up again. These locations have significant long-term capital value appreciation potential, and well-informed investors are keeping a close eye on them.

Mumbai Commercial Property Classified

The Central Business District (CBD), which includes the micro-markets of Nariman Point, Fort, Ballard Estate, Cuffe Parade and Churchgate

The Secondary Business District (SBD), which includes the micro-markets of Worli, Lower Parel, Prabhadevi, the Bandra Kurla Complex (BKC) and Kalina,

The Peripheral Business Districts of Andheri-Jogeshwari, Malad-Goregaon, Powai-LBS Marg and Thane-Navi Mumbai.

The commercial property investment opportunities vary according to the unique characteristics of each micro-market.

At first glance, some of these markets would seem to be places to avoid, given the high vacancies there. However, some of these areas bear closer scrutiny beyond the seemingly obvious.

Data trends of the past shows that rentals and capital values in almost all Mumbai micro-markets, except Lower Parel and Andheri, have either remained stable or gone up over the last 30 months. Many corporates are today migrating from the traditional CBD to BKC and Lower Parel.

Over the next two years, the rentals and capital values in Mumbai’s CBD are expected to come down, rendering them more buyer and tenant-oriented for the first time in decades.

Meanwhile, the SBD district of Lower Parel is seeing significant demand, given the fact that the rentals and capital values there are less than half of those in the CBD and at the Bandra Kurla Complex. Over the next 12 months, the rental and capital values in Lower Parel are expected to bottom out. Commercial properties here are excellent investment propositions at the current pricing levels.

Meanwhile, BKC is emerging as Mumbai’s acknowledged ‘alternate CBD’, with many banks moving their headquarters there from their erstwhile CBD locations. Capital values and rental values in BKC are expected to go up in the medium term, making commercial properties there a good buy.

The limited commercial space supply that BKC will have to address the strong demand over the next two years adds to its investment potential. The Bandra Kurla Complex is particularly interesting for HNIs from the diamond industry, given its proximity to the diamond bourse.

Office Space Investment Guidelines

Entrepreneurs who are considering buying commercial real estate for self-use should ensure that the amenities in the project match their business needs

Investors need to make sure that they study the quality of building, location, demand supply dynamics and yield compression possibility

The best buildings in each micro-market will always command a premium

Check the developer credentials, potential for infrastructure development, access to public transport and quality of property management

Investors looking at income-producing office assets should look at the break-up of cash flows, the vacancy factor, expenses such as maintenance, property tax and building insurance, lease term, lock-in period and expiry dates, long-term capital appreciation potential and refurbishment, refinancing and re-positioning potentials.

Homes for all plan gathers dust as Mumbai chokes

Even as the cost of housing is skyrocketing in Mumbai, an ambitious proposal to create at least 500,000 houses as part of a “Homes for All” initiative between the real estate industry and the Maharashtra Government is gathering dust in the ministry.

The proposal, signed in April 28, 2010, between MCHI-CREDAI and the State Government, sought to find answer to the burning issue of affordable housing.
“The parties agree and acknowledge that today there is a severe deficit of good affordable housing availability in the Mumbai and MMR,” the MoU said explaining the “initiative and a pledge for maximising the construction of more Affordable Homes” in the Mumbai and MMR known as “HOMES FOR ALL” and has approached the GOM for its support and aid in the course of enabling the members of MCHI to create more Affordable Homes in the Mumbai and MMR and the GOM has agreed to extend all necessary co-operation, including legislative revamp, development potential incentives to developers, and authorising the nodal agency to provide for a single window clearance to projects comprising Affordable Homes.

“Yes, this was the initiative of MCHI-CREDAI on behalf of the developer community in Mumbai and MMR area,” says Paras Gundecha.
‘The overall objective of the initiative was to go for construction so as to address the yawning housing demand-supply gap and to provide affordable homes to the EWS, LIG and MIG groups,” Gundecha says.

But not a single paper moved after that despite the MCHI-CREDAI reminders to the government at various levels though, as per the MoU, the State Government was to extend all necessary cooperation.

The MoU envisaged government steps like including revamping legislation, offering incentives to developers, and authorising the nodal agency to provide for a single window clearance to projects comprising affordable homes.
The immediate objective of the initiative was to provide more affordable homes to economically weaker section, lower income and the middle income groups in the society so that the housing deficit in Mumbai and MMR could be brought under control.

Gundecha lamented at the fact that the initiative remained on paper while the availability of housing for the common man continued to be a dream.
The availability of 500,000 houses could have easily eased the demand-supply mismatch and kept the market rates under some kind of a check, and we could have made history with this unique public-private joint effort. But unfortunately today Mumbai has emerged as the costliest real estate market, he said.
As per the MoU, the Government was to appoint a nodal agency to handle approvals though a single window clearance to all such projects and plan roll out was to begin in 60 days of signing of the agreement. But nothing has moved even after 24 months!