With four key infrastructure projects in the Mumbai Metropolitan Region (MMR) nearing completion, the business and residential hubs of the city will soon see increased activity in real estate, said a report released on Monday.
The projects include the Mumbai Metro, especially the lines which are set to be operational by 2024; the Mumbai Trans Harbour Link (MTHL); and Phase 1 of both the Coastal Road Project (CRP) and Navi Mumbai International Airport (NMIA).
In tandem with improved connectivity, commercial office micro markets of Bandra Kurla Complex (BKC) and western suburbs will see an uptick in annual leasing. The traditional micro markets of old CBD and central Mumbai are set to receive a major facelift while the satellite market of Navi Mumbai will offer a plethora of real estate opportunities, said a report by property consultant Colliers.
Metro connectivity is likely to elevate annual office leasing in BKC by 1.5 times from 2025 onwards against 1 million sq ft gross leasing in 2022, it said. “Once operational, Metro lines 2B (D. N. Nagar-Mandale) and 3 (Colaba-SEEPZ) will provide the much-needed augmentation of public transportation system in BKC and annexe…”
The upcoming supply of 7 million sq ft in the next three years would increase the current stock (14 million sq ft) in BKC and annexe by about 50%, with the largest chunk to be ready once the Metro lines are operational. Moreover, elevated demand levels are likely to drive average monthly rentals of BKC and annexe, higher by 5-10% by 2025 as compared to current levels, it said.
The report said the new Metro lines are expected to bring homogeneity in housing prices in western suburbs. “… the housing price differential which was more than 80% in Dahisar (compared to Santacruz) few years ago, has already moderated to less than 50%,” it said.
Although, the price differentiation within western suburbs will continue to narrow, overall residential prices in the area are likely to further head north in the next 2-3 years. Suburbs such as Andheri, Jogeshwari, Malad, Goregaon, Lokhandwala, Kandivali and Borivali have already witnessed a 5-10% rise in residential prices in the last 1-2 years, it said.
From 2025 onwards, annual gross leasing in western suburbs has the potential to reach 1.5 times 2022 levels (1.3 million sq ft). Notably, pockets within western suburbs such as locations along Andheri-Kurla Road and Malad-Goregaon stretch, which are preferred locations for flexible space operators, could see further traction in the next 1-2 years and can become the flex hot spots of the region, it said.
The Metro route 3 (Colaba-SEEPZ), MTHL and Phase 1 of Coastal Road will bolster the connectivity with key business districts like old CBD and BKC, it said .
“In anticipation of the upcoming infrastructure upgrade, central Mumbai is back on the radar of developers and occupiers since the last few quarters. With likely infusion of fresh Grade-A supply having superior amenities, occupier interest is likely to continue in the next few years,” it said .
Superior office amenities in turn would steadily drive the annual demand 1.5 times from 2025 onwards compared to 2022 levels (0.8 million sq ft) in central Mumbai, it said. The report highlights that the area is likely to see about 5 million sq ft of new office supply in the next three years, increasing the Grade-A stock by about 25-30%. Average quoted rentals are also likely to firm up by about 5-10% in the next two-three years, up from around `170/sq ft a month currently.
Completion of MTHL and development around the upcoming airport will transform the real estate landscape of Navi Mumbai, the report said.
Led by enhanced connectivity, Navi Mumbai has the potential to witness about 20-25% higher annual leasing activity 2025 onwards, compared to 2022 levels (2 million sq ft). Moreover, the micro market is likely to witness about 9 million sq ft of supply infusion in the next 3 years, more than 75% of which pertains to IT stock.
The report said MTHL will be pivotal in connecting the data centre hotspots within Navi Mumbai with the rest of the region. In three-five years, investment to the tune of $ 3-4 billion have been planned in data centres in the micro market.