Mumbai's New-Age Builders want a Room at the Top
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Image: Vikas Khot
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NEWBIE: Kamal Khetan took calculated risks to break into Mumbai's real eastate market
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ucked away deep inside Bandra-Kurla Complex (BKC), Mumbai’s newest business district, and overlooking the dirty waters of Mithi River, Signature Island doesn’t really sound like a posh address. But that has not stopped the Maximum City’s well-heeled from shelling out Rs. 25 crore or more for an apartment double the size of a basketball court.
Further down the vehicle-deluged Western Express Highway, an 80-acre plot in the filmi neighbourhood of Goregaon will soon host three residential towers packed with amenities that even the richest in Mumbai couldn’t have dreamt of a few years ago. A skating rink in this sweaty, hot city is par for the course.
At first glance, these properties defy logic. Homes this expansive are more the exception than the norm in this space-starved city where owning a 600 sq. ft. house makes you feel like a king. Location is held at a premium, not the living space. A tiny shack in the city’s south could command several crores of rupees. Even after the property market expanded to the suburbs over the last five years — when builders like Hiranandani and Raheja sold hundreds of middle-class homes — the average size of a Mumbai flat hasn’t crossed 1,000 sq. ft. So, apartments seven or ten times the size, away from the traditional uptown are a new phenomenon.
But a new generation of real estate mavens believes that is the way to go. Ask Kamal Khetan, a first-generation realtor, Vikas Oberoi, the young head honcho of Oberoi Constructions and Abhisheck Lodha, managing director of Lodha Developers, and they say the strategy has already begun to work. They are getting young and prosperous nuclear families to go in for more spacious and luxurious living quarters. The farther the couples move out, the bigger their homes will be.
It helps that the market itself is shifting towards larger apartments. “There is a pent up demand for bigger homes in Mumbai and this is still the early wave of upgrades,” says Oberoi. He and Lodha are targeting double-income families that earn over Rs. 30 lakh a year.
The number of households in Mumbai is expected to rise from 42 lakh in 2008 to 66 lakh in 2020. People earning above Rs. 20 lakh will increase from 4 percent to 10 percent during the period. That’s 660,000 families. The next level, earning in the range of Rs. 10 – 20 lakh, will sharply increase from 4 percent to 15 percent. Lodha says that there is a good business plan in just focussing on the top two brackets.
While the opportunity clearly exists, it will not be easy for these builders to pull off this trick.
Because of high investment interest, Mumbai real estate can be volatile and one bad land deal could sink a company. In a downturn, these ultra-luxury homes will be the first to be hit. Dropping prices could make such high-cost projects unviable. Also, Mumbai has several developers who can scale up and offer similar apartments. Raheja is already building large condominiums, while a relatively new developer, Dosti, has gained success by creating a township within the heart of the city. In short, the segment will soon see fierce competition.
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Fun fact: a 1 % rise in floating loan interest rate in the first year can increase your EMI by 20-30% assuming you have a 10 year 10% 10 lakh home loan.
Do note though that this is a rather well executed strategy by the real estate "mafia" to milk the well to do customers. First they sold very basic apartments at exorbitant prices and no real value apart from the four walls in return; and when a threshold is reached and the customer seems to be not buying into the same they have now launched these "luxurious apartments" with "new age amenities" at new levels of premium which btw should have been offered at the initial levels already!Well disguised i say!
