By Ravi Ahuja
As the Mumbai Metropolitan Region (MMR) is experiencing saturation in most commercial markets, we are witnessing more and more developers moving towards the Navi Mumbai region. Navi Mumbai boasts of the necessary infrastructure, affordable residential catchments and availability of ample land bank. Developers like K Raheja Corp, Raheja Universal, Tata Realty, Reliable Developers, etc. already have a strong presence in the IT Corridor of Navi Mumbai – Thane Belapur Road. As per the market estimates, K Raheja Corp holds around 150 acres of land between Airoli and Juinagar. They currently operate 3 IT parks under the brand of Mindspace and have built around 7.5 million sq ft of office space in the region. Additional office space of around 3 million sq ft is under construction and another 2-3 million sq ft is in the pipeline.
According to sources, K Raheja Corp is developing a commercial development, Gigaplex, which is estimated to be a 4.8 million sq ft development. Out of this 1.2 million sq ft is currently leased out to companies such as IGATE, Capgemini, Axis Bank and Bhansali Infotech. K Raheja Corp has also bought a 30 acre land parcel in Ghansoli from US-based specialty chemicals company- Cabot in 2016, where they plan to come up with the fourth IT park. They acquired 62.25 acre land parcel from the Mafatlal Group company- Standard Industries, also in Ghansoli which has a development potential of 8 million sq ft. Reliable Tech Park has around 1.4 million sq ft of commercial space and L&T’s Grand Central in Seawoods is a unique combination of commercial and retail development of around 2 million sq ft.
IT companies require less than a dollar rent per sq ft per month market. At present, most IT companies lease its commercial office space for INR45-60 per sq ft, which is one of the lowest rates in Navi Mumbai as opposed to those in Mumbai where IT rentals can range between INR100 to 125 per sq ft per month in Goregaon, Malad, Vikhroli, LBS Road, etc. The business model of IT-ITeS companies, given their competitive industry and margins, forces these companies to optimize their cost as rental growth over a period makes it unviable for them and they move towards further suburban locations that are affordable. Some of the marquee names include Capgemini, Reliance Industries, Syntel, Wipro, TCS, L&T Infotech, IBM, WNS and Accenture. In addition, a few BFSI companies are also looking at Navi Mumbai for their back-office operations. Recently, Swiss Bank UBS leased an office space of around 0.4 million sq ft at Gigaplex, Airoli while State Bank of India and Axis Bank already have their back-office units in the satellite city.
With almost 6 million sq ft of upcoming supply expected in Grade A establishments, we expect a stronger IT-ITeS presence in the Navi Mumbai market in upcoming quarters. Furthermore, we have also seen Navi Mumbai emerge as a major residential destination in the last few years with affordable homes in areas like Seawoods, Sanpada, CBD Belapur and recently Ulwe and Kharghar. Hence, Navi Mumbai not only has strong connectivity via rail, road and upcoming metro, but it has all the necessary social infrastructure like good schools, shopping centres, malls, restaurants, hotels, gymnasiums, stadium, etc. The upcoming Navi Mumbai International Airport, once completed, will also add to the social infrastructure palette of Navi Mumbai.
Apart from Grade A establishments, coworking operators have also started making their presence apparent in the Navi Mumbai region with major players like Awfis and 91Springboard taking up office spaces in the recent years. Coworking offices are primarily housed by start-ups and SMEs, with the percentage of IT start-ups in India being quite high. So, we believe that a number of start-ups will be encouraged to move in these areas in order to reap the benefits of location and low rentals.
The available land resources also attest to the mixed-use potential in Navi Mumbai. Most of the land parcels in the region are owned by Maharashtra Industrial Development Corporation (MIDC) and they allow residential, educational, institutional, assembly, and business land use on a commercial plot, as long as the plot area under all such support activity/uses taken together does not exceed 20% of the total plotted area of any notified area of MIDC. Apart from these, 10% may be allowed for essential staff quarters in each plot area more than 1 acre, in non-chemical industrial plot only. So, we may hear of some integrated townships in the future.
As land keeps getting scarce in Mumbai and IT-ITeS companies look for quality Grade A establishments at affordable rates, Navi Mumbai can be perceived as a solution to these requirements. Hence, we expect Navi Mumbai to emerge as a major IT corridor in the next few years on the back of available infrastructure and more importantly talent pool within the Thane district.
(The author is Executive Director, Office Services & Investment Sales, Colliers International India. Uttara Nilawar, Manager, Research, Colliers International India, also contributed to this article)