While Navi Mumbai has a booming real estate market, it should avoid the mistakes that Mumbai has made.
In terms of government and administration, the Real estate market in Navi Mumbai outperforms Mumbai in many respects, and its developers should benefit from their Mumbai counterparts’ mistakes.
Prices are increasing.
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Welcome to Navi Mumbai, a satellite city of Mumbai, where home prices surpass those of the Mumbai real estate industry. Though prices in Mumbai have been slow to rise and have been trending downward, prices in this sector have been steadily increasing. Today, rates in the area are similar to those in Central Mumbai’s Lower Parel and are comparable to those in older buildings in Bandra and Peddar Lane.
The ticket sizes are also not small. At the fabled Palm Beach Road – or Navi Mumbai’s Marine Drive – it’s not unusual to see ventures fetching over Rs 5 crore. Furthermore, small players who have little or no influence outside of the region are largely demanding this pricing.
The price levels that have been achieved in this laid-back and sleepy market can seem strange to residents outside of this area. The question is, why is the price differential between Navi Mumbai and Mumbai narrowing?
On a simple level, one might argue that prices in the commercial capital had been maintained at unsustainable levels for a long time and that it was only a matter of time before they were corrected. On the other hand, it is no secret that the housing supply in Navi Mumbai has been tightly regulated in order to allow for absorption. In terms of the stock market, Navi Mumbai is a thinly priced stock with a high price.
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On a larger scale, there is a case to be made that Navi Mumbai has greater governance (relatively) than Mumbai. The governance is also backed up by strong financial support. As a result, considering the fact that Navi Mumbai’s population is just 1/11th that of Mumbai, the Navi Mumbai Municipal Corporation’s budget is almost 1/5th that of the Mumbai Municipal Corporation.
The developer, on the other hand, is the only person who can ruin the Navi Mumbai real estate party. Any builder who uses words like ‘saleable area,’ ‘built-up area,’ ‘super built-up area,’ etc., I suspect, as readers of this column know (instead of carpet area).
Almost every developer in this business still uses those outdated words, so I’m skeptical of what they’re doing. Even the marketing content and presentation are rudimentary, similar to what was previously seen in Mumbai before Lodha Developers revolutionized it.
Yet, in the grand scheme of life, these are trivial problems. The main concern is that Navi Mumbai developers can repeat the same mistakes as Mumbai developers. Developers speculated that a good reaction at higher price points for a limited sampling of units meant that the benchmark price for homes could be gradually reset at a much higher level.
This new benchmark price ignited some of Mumbai’s strangest land value sales, as well as government pressure to change ready reckoner prices. Because of the high-cost structure, developers have no choice but to sell their goods high for a huge number of units – to appeal to a demand that simply didn’t exist. By the time it came to a head in 2020, the harm has already been done.
The recent land auctions held by CIDCO in Navi Mumbai, as well as the bid prices put up by developers, reminds me of the behavior of Mumbai developers almost a decade ago. Bids have risen to heights that are within striking distance of land prices in Mumbai’s prime districts.
“Because the area is rising well, land pricing should not get ahead of itself,” says Ajay Punjabi of Bluekey Realty. As a result, the costs of homes, businesses, and retail units will increase. Affordability is important for attracting and growing a thriving market.”
Affordability is important.
There’s a case to be made that the show will go on as long as officials keep supply restricted. It’s a fair claim. However, as seen in Mumbai, once a certain price point is reached and unaffordability sets in, the path becomes difficult as sluggishness sets in in the main and resale markets.
In terms of government and administration, Navi Mumbai outperforms Mumbai in several respects. Its creators should learn from the mistakes of their Mumbai counterparts. It cost Mumbai’s developers a lot of money. It’s possible that the same will be true in Navi Mumbai.
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