Nov

27

Mumbai’s commercial real estate hits a record high

November 27, 2007 posted by indiatime |

Three commercial properties in the Bandra-Kurla complex in Mumbai, have received bids totalling an incredible Rs 2800 Crores! The properties cover an almost 6-acre lot in the middle of Mumbai, an area which only a few decades ago, was covered with swamps. The 3 companies that are said to have won the bidding war are the Wadhwa group, Hiranandani-TCG conglomerate, and the Reliance group.

Though these are the highest prices (about $25K per square foot) being paid yet for any commercial property in India, these still pale in comparison to what Tokyo’s Ginza business district boasted ($139K per square foot) about 20 years ago at the height of Japan’s real estate bubble. But Mumbai’s real estate is not even remotely close to being considered a bubble, partly because of the population density, partly because of Mumbai’s unique place in the Indian market, and mostly due to the timeframe for which the real estate prices have continued to expand. So, though the commercial real estate in Mumbai looks prohibitely expensive by any means, chances are these prices will keep rising for the next 10-20 years.

But that doesn’t mean the residential or the commercial real estate in Mumbai are not vulnerable to external factors. One of the major risk factors for Mumbai is the continually increasing strain on its shared natural resources by the ever increasing population of that city. Mumbai, like many big metros, has so far been quite lucky. The heavy rains that hit the city a couple years ago, exposed the terribly paper-thin margin Mumbaikars enjoy in their daily lives. The tragedy of New Orleans has told us that big cities that thrive next to large water bodies must comprehend the double-edged nature of large water reservoirs. In spite of the local government’s claims, Mumbai came very, very close to disaster a few times during the last 2 years, barely escaping a repeat of a similar tragedy.

For Mumbai, so long as the already uneven balance between natural resources and the population demand hangs lucky, the real estate boom will go on. But like California and Tokyo and New Orleans, anyone speculating or gambling on long-term price mircales for Mumbai may end up leaving peanuts to their future generations. For Mumbai it is not a question of if or when the bubble will burst. It is if and when the city and nature itself will come part at its seams.


Comments

Name (required)

Email (required)

Website

Speak your mind

1 Comment so far

  1. Nikhil on November 30, 2007 3:33 pm

    This was the commercial side,Few days back there was a woofing deal made in Mumbai- residential area .this country’s largest-ever residential transaction on record was completed when a four-bedroom flat at NCPA Apartments at the Nariman Point end of Marine Drive fetched a gravity-defying price of Rs 97,842 per square foot, or Rs 34 crore. The plush pad is located on the seventh floor and was put up for sale early this month by its owner.
    If such sort of deals will take place then where will the indian economy go?Wont there by any sort of disbalance? How inflation will be controlled? What’s your take on this guys?
    check out my blog - http://www.realtydigest.blogspot.com for more indian real estate stuff.

Search

 




Most commented

Mumbai's communal overtones signal upcoming elections (475)
Ten reasons why India is doing better than Pakistan 60 years after independence (441)
Why did Kolkata police murder Rizwanur Rahman? (333)
Bun roller millionnaire saves Indicted Swami's buns by posting $10 bond (161)
Top 10 Zardari jokes banned by Pakistani (105)
Top 10 reasons India sucks at the Olympics (77)
Auntie, Corruption bureau and Crime branch (64)
Desperate Indian housewives (54)
Shah Rukh Khan detained at immigration checkpoint in US (46)
Sex, lies and CD at the Delhi Jal Board (DJB) (40)


Most visited

Hollywood’s first Indian star
Meeting Raj Kapoor at the barbershop
Madhubala on a postal stamp
Why I’m happier than Mukesh Ambani
An inconvenient truth about India’s intellectual property
UFOs may be ‘idlis’ but time travels only in ‘medu-wadas’
Dr Singh is no Dr King
Lesser Known Indians
The Most ‘Nobel’ Teacher of Them All
The third Indian revered in China
A little Poland in India
The vanishing of Indian languages
The looting of Chandigarh’s treasures
Bharat, Pakistan and Hindustan, Indiana
Welcome to India, Steve!
Top 5 explanations for the president’s gesture
An IIT on every street, an IIM on every block
Pakistan, Jinnah, Wadias and the American anthem
An IAS officer’s nightmare of lustful, lascivious stares comes true