Super Luxury Residential Development in Mumbai 2011
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Super Luxury Residential Development in Mumbai 2011

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Mumbai luxury real estate is one of the costliest in the world also one of the fastest in terms of price growth. While luxury real estate prices remained stagnant in the most parts of the world, in ...

Mumbai luxury real estate is one of the costliest in the world also one of the fastest in terms of price growth. While luxury real estate prices remained stagnant in the most parts of the world, in Mumbai prices increased by over 20% in 2010.And this trend is only bound to continue with aggressive real estate appetite demonstrated by Indian HNIs. According to the report Indian HNIs would like to invest at least 10% of their total portfolio in residential real estate.

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Super Luxury Residential Development in Mumbai 2011 Document Transcript

  • 1. 5/1/2011Master Sun Consulting , MumbaiMASTERSUNMUMBAI LUXURY RESIDENTIALDEVELOPMENT- 2011 UPDATE
  • 2. Mumbai luxury real estate is one of the costliest in the world also oneof the fastest in terms of price growth. While luxury real estate pricesremained stagnant in the most parts of the world, in Mumbai pricesincreased by over 20% in 2010. According to Global Wealth Report byKnight Frank and Citi Bank, Asian cities such as Shanghai and Mumbaiwill start to close the gap in next 10 years with New York and Londonthat are presently on top of the wealth report’s global citiesindex. Mumbai was also ranked the world’s 25th most expensive city interms of property prices while Monaco remains the world’s costliestcity followed by London.And this trend is only bound to continue with aggressive real estateappetite demonstrated by Indian HNIs. According to the report IndianHNIs would like to invest at least 10% of their total portfolio inresidential real estate. This was double than what financial adviserswould have done. Real estate, as an asset class, however has rarelydisappointed in a city like Mumbai where stories of five baggers in fiveyears not very uncommon.The luxury apartment in a city like Mumbaimay cost anywhere between USD 1 million to USD 12 million, and rangefrom 5,000 square feet to 13,000 square feet in size. The luxury realestate euphoria is fuelled by bullishness in some real estate pockets inSouth Mumbai where luxury apartments in have become 25% to 30%costlier than they were a year ago.
  • 3. However it has been a mixed bag in 2011, where the glut ofapartments in Central Mumbai can play a spoil sport and one may seesome correction in prices. According to broker estimates around 40%of luxury apartments coming up in Mumbai are unsold. Buyers inmarkets like Central Mumbai are not buying into high rates of INR25,000 per square feet. And as a result, pre-sales (wherein residentialapartments are typically sold before fully constructed) have comedown. This has resulted in construction delays since Indian developerswant to ensure that they dont have a large number of unsold units intheir ready buildings.Mumbai’s Luxury Residential Micro Market- South MumbaiMumbai has basically two luxury micro markets- South Mumbai &Central Mumbai. The South Mumbai market consisting of areas likeMalabar Hill, Cumbala Hill, Napean Sea Road etc. is an evergreenmarket with severe paucity of land and an insatiable appetite forluxury development. Price points of INR 50,000 per sqft are fairlycommon in this market. Buyers usually are Indian HNI businessmen(upgrading from old constructions to new fully loaded, feature richtowers), NRIs and well-heeled professionals. They usually take verysmall bank loans (often for tax efficiency) and are not affected byinterest rates firming up etc.
  • 4. Trump Tower, Hughes Road:Donald Trump plans to bring his signatureof luxury homes to Mumbaion Hughes Road in south Mumbai. TheTrump Towers are being developed along with Mumbai-baseddeveloper Rohan Lifescapes. The 60 storey Tower will have 5,000square feet apartments overlooking the Arabian Sea.The tower willhave around 45 apartments and the lifestyle amenities will include aluxury spa, gymnasium and a mini-theatre. It will be interesting to seewhether the design or the development will have anything unique orwhether it will be a just a case of Mr. Trump charging a hefty royaltyfee for his brand. According to market sources given the small amountof flats and the novelty associated with the Trump brand name, thedevelopment may fetch a 20-25% premium vis-a-vis neighbourhooddevelopments in South Mumbai.Mukesh Ambani’s Billion Dollar Home: South Mumbai also has theprivilege of housing India’s richest man, Mr. Mukesh Ambani, tipped tobe the world’s richest man in a few years. Mr. Ambani has built theworlds most expensive house in Mumbai estimated to be above abillion dollars. The house named Antilia, after a mythical island,resembles a condo tower or a set of Lego building blocks from theoutside. But from the inside it is grand consisting of around 37,000 sqmetres of space, more than the Palace of Versailles. The billion dollartower soaring over 550 feet has three helipads, a health club, dancestudio, fifty seat movie theatre andunderground parking for overhundred and fifty cars. The home is rumoured to have a wait staff of600.
  • 5. Mumbai’s Luxury Residential Micro Market: Central MumbaiThe Central Mumbai luxury market consisting of Lower Parel,Mahalaxmi, Worli and Elphinstone is facing a glut of luxurydevelopment with a supply of 10 million square feet of high-endresidential spaces coming in 2-3 years. It is difficult to go a kilometrearound this area and not see a new construction coming in. This belt isset to see 7-8,000 houses in 2-3 years. With the projects quotinganywhere between Rs 18,000 and Rs 26,000 per square feet it isdifficult to see how this supply will be absorbed at these rates.There are two segments of developers here. One set of developers, sayClass A, have low inventory and/or are in a JV with the land owner(who acquired land at a nominal rate years ago) willing to hold on tillthe market recovers. The other set of developers, say Class B, arewilling to negotiate since they have a large inventory coming in andhave brought land at reasonably higher rates. As a consequence theprice quoted by two neighbouring projects could have a noticeablevariation.The Class A developer prefer slowing down the project instead ofreducing prices. The cost of land for these developers is low and theselling price for the apartment may be 5-10 times the cost ofland.These developers bought land in cotton and textile mills at INR
  • 6. 3,000-5,000 per square foot around a decade back. They recover theirland cost selling a small percentage of the apartments. They canthereafter afford to wait to sell most of the inventory at high prices.This will obviously cause a lot of delay in construction of theseprojects.The Class B developers who has a large inventory of properties isfeeling the crunch due to high interest rates (affecting buyers aswell) and cautious financing by banks. These developers will be thefirst one to cut prices and price cut of 10% to 15% may be in order.The price correction may also be disguised by offering freebies likefree parking and a waiver of stamp duty.Central Mumbai is however also witnessing some exciting super luxurydevelopments some of which are Lodha’s World One & Indiabull’s Skydevelopments.Lodha’s World One:Lodha’s 450 metres, 117-storey World One toweris scheduled to come up by 2014 on the erstwhile Srinivas Mills inLower Parel. World One is tipped to be taller than the Empire StateBuilding in New York andscheduled to beat the record for tallestresidential tower which is currently held by the 323-meter residentialcomplex in Australia called "Q1.World One will be a super luxury development consisting of about 300units incorporating principles of sustainable and green living byrecycling its water, harvesting rain water and using solar power. Thebuilding is targeting an Indian HNI who prefers a lot of outdoor space in
  • 7. apartments unlike insides of the apartments in New York, Hong Kong orLondon. Indian families dont want to be shut inand need an access tooutside air so each apartment has a balcony. The foreigner or an expatin India will detest that on account of pollution & dust.The height and the unique curved form of the building will allow a 360degree panoramic view of the city including the Bandra Worli Sea Link,the Race Course and the Arabian Sea. The height will also cut downnoise, pollution and heat.The flats on the higher floors will have 4.5centigrade degrees lower temperatures than the ground floor. Lodhahas already pre-sold some of these flats to its old customers at a 30%premium to neighbourhood development at INR25,000 per square feet.Indiabulls Sky Project: Indiabulls Sky project, a high-end offeringfrom Indiabulls Real Estate will be hopefully delivered by 2013. TheSky project is made up of three towers - Sky, Sky Suite and SkyForest.The project has choice of villa-like presidential apartments,duplexes and penthouses. The living spaces target the rich to the superrich with spaces from 2,600 square feet to 13,500 square feet.Apart from the lavish spa and the massage parlour, the building comeswith its own housekeepers and personal butlers. It boasts of spaciousreading rooms, a home theatre, a cigar room, a wine cellar and anAmerican deli. To meet the needs of a global jet setting Indian, thedevelopment has an ultra modern business centreand services likeconcierge service for travel bookings, limousine hires, or currencyexchange airport.
  • 8. Add to all the above, an in-house convenience store with a pharmacyand a 24-hour coffee bar, the project promises to provide ascintillating lifestyle.Mumbai’s Luxury Residential Emerging Micro-Market: WesternSuburbsIt is estimated that by 2020, people earning above Rs. 20 lakh willincrease from 4 percent to 10 percent of Mumbai’s population whichtranslates to roughly six hundred thousand families. There will be aneed for luxury housing for these families in Western Suburbs.The Western Suburbs are a hub of commercial activity with Bandra-Kurla complex & Andheri Kurla Road emerging as thriving commercialcentres. This is fuelling a great demand for luxury housing in thevicinity of these centres. The emergence of luxury housing in suburbs issupported by higher land availability and a high FSI (twice as much asin South Mumbai).The luxury residential in Western Suburbs is being led two developers:the Lodha group and the Oberoi group. These developers havedeveloped differentiated projects in suburbs backed by good sales &marketing programmes.These developers burst into the scene when they picked up real estatethat is not easy to come by in Mumbai. Oberoi got 80 acres of land that
  • 9. had been pharmaceutical company Hindustan Ciba Geigy’s researchcentre in Goregaon (a suburb near Andheri). Oberoi has developed thisarea into an island of luxury development and commands a 25-30%premium for its residential & commercial luxury development.The Lodhas have launched a project called Lodha Fiorenza in Goregaonas well. This project has been launched with Jade Jagger, the daughterof Rolling Stones rocker Mick Jagger. Jagger has partnered withLondon-based design firm Yoo Design Studio and is set to design 400homes priced between Rs 3 crore and Rs 12 crore. The project hasreceived a good initial response with close to 100 units sold since thelaunch.
  • 10. ContactSarvajeet at sarvajeet@theadiva.com, +91 9920803060