by Rohit Poddar, Managing Director, Poddar Housing and Development
One of India’s most expensive real estate markets, Mumbai has started to witness positive market expansion lately. Over the past decades, the city has brimmed up and overflowed to the suburbs and beyond. And as presumed, buying a property has become as expensive as it could be. While the core city and a few suburbs are not feasible and remote, a few peripheries are undergoing major facelifts.
Demand for office spaces, which had taken a massive hit at the start of the Coronavirus pandemic, is seeing signs of recovery. As the Covid numbers dip across the country, the demands for office space are seeing a sharp rise in Mumbai and its suburbs. The Indian real estate market didn't perform for the last five years but it is showing a strong recovery in 2021 where the sector is bottoming out in terms of both volumes and prices.
According to the Knight Frank’s Office Market Update-Q3, 2021, the Mumbai market is among those to have seen the sharpest recovery. The IT sector has had the most demand with regard to leasing of office spaces. According to the data, office space leasing in Mumbai rose to 1.2 million square feet during July-September 2021 from 1 million square feet in the year-ago period. From January to September, the market for workplace real estate witnessed an incremental activity of 13% in transaction volumes. New office completions grew 6% from the year-ago period. The report said total office transactions for the top eight markets in the third quarter of calendar year 2021 improved to reach 83% of the quarterly average of 2019.
Shared below are a few reasons why the Western Suburbs of Mumbai are becoming the most appealing investment market from a commercial real estate standpoint.
The preferential switch
The western belt right from Goregaon to Mira Bhayander has witnessed a sharp rise in commercial development. With a prolonged period of staying indoors, the desire to have a much-needed breathable space and the need to work in better and healthier conditions has surfaced more than ever. Present-day consumers are seeking locations that offer a healthy and enriching work environment. Consumers have also become cautious about their investments, making sure that their money is invested in the right place and guarantees profitable returns.
Superior Alternatives
Areas like Virar-Vasai, Naigaon and Bhayander are not far behind in emerging as profitable destinations. While Kandivali and Goregaon rank high on general infrastructure, affordability and workplace catchment, Vasai-Virar is coming up in a big way due to its planning, a distinct culture as well as lifestyle. Property rates in the western suburbs are favourable, and there is a good range to choose from as well. Kandivali is already witnessing a boom in commercial properties as the Borivali has now saturated. As a result, commercial developments are seeing a great demand.
Increasing demand and less supply in the saturated market
The Mumbai Metropolitan Region (MMR) is by far one of the biggest real estate markets in the county. Its share of real estate absorption is almost 32%, which is tantamount to more than 50% of absorption when considered in terms of value. However, the already developed and overpopulated corporate hubs like Andheri, Lower Parel, Borivali and regions around BKC are way out of reach for many commercial real estate investors and the change in preference and lifestyle are pushing them to look around for alternatives in the western suburbs.
Connectivity and desirable vicinity
Properties in the vicinity of a commercial hub and better connectivity to other prominent locations provide higher returns and are majorly preferred. Western suburbs like Kandivali, Goregaon, and Mira Bhayander are the key hotspots for commercial properties. The vicinity offers the best educational institutions, healthcare facilities, and retail & entertainment outlets. The Western Express Highway in close proximity ensures great connectivity to all parts of MMR. The upcoming Andheri – Dahisar, and Dahisar-Bandra-Mankhurd metro line along with other infrastructural developments are expected to reduce traffic concerns.
The dominating affordability in the region
Affordable property developers can anchor a sizable number of state and central tax credit possibilities. Builders can equip themselves for government relief or subsidies in the construction of new, or rehabilitation of existing infrastructures. The investment of lakhs of crores of rupees into India’s infrastructure segment, with a cornerstone, to facilitate connectivity is boosting up affordable property buying. The issued debt financing for REITs and InvITs and the backdrop of the Development Financial Institution for supplementing funds for infrastructure and the real estate market is anticipated to supply a major uplift to the industry and help bring in more investments.
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