Confidence among listed real estate developers has improved, especially for Mumbai, after strong August property registration data. With the festive season approaching, many of them have planned aggressive launches. However, some micro-markets, especially in the major Mumbai Metropolitan Region, are attracting the attention of listed real estate developers.
For example, better connectivity and improved social and physical infrastructure such as schools, hospitals and malls have led to the growing popularity of suburbs such as Bhandup and Mulund among developers, said analysts.
“Mulund-Bhandup has seen around 40% new launches in the last decade and the trend is likely to continue with the entry of large Grade-A developers. Supply is largely skewed towards large reputed builders and demand is largely driven by mid-premium segment ( ₹10-20 million ticket size and 2/3 BHK) and meet around 45% absorption in the micro market,” analysts at Antique Stock Broking Ltd said in a report.
Oberoi Realty Ltd., Macrotech Developers Ltd. (Lodha) and Prestige Estates Projects Ltd. are some of the listed firms that have exposure in the sector. Of the three, Oberoi Realty entered the segment with the launch of its luxury projects Eternia and Enigma in January 2015. Lodha has recently launched a project in the mid-premium category of around 0.60 million sq ft in Mulund East. Bengaluru-based Prestige Estates will make its debut in the Mumbai market with the launch of its Cosmos project in Q3FY22 with two towers in the first phase.
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“In our view, the right size and right pricing coupled with the underlying strong demand in residential real estate, Lodha and Prestige projects are expected to outperform. Oberoi expects to face increased competition from these new offerings, which may further reduce its sales velocity.”
Not just listed developers, many unlisted but also large real estate firms have projects in this area. These include the Kalpataru group, the Wadhwa group and the Runwal group. Analysts say that though this market has its positive sides, it will be challenging to break through in case of higher sales. Also, given the higher supply, an improvement in absorption would be gradual at best, he said.
“Mulund has dense and quality social infrastructure, apart from the important factor of being located within the Mumbai (road) toll points. Also, the pricing makes Mulund attractive to customers and developers. Average residential price range on per sq ft basis in Mulund-Bhandup region is approx. ₹20,000-23,000. Also, developers are offering 2-3% discount on finished projects and more on under construction projects,” said Vivek Rathi, director research, Knight Frank India.
“This factor makes these areas a good alternative to Thane, where prices are higher or the same for select projects,” he said.
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