NEWS

A matter of appreciation

October 09, 2018

Here's how a wide range of infra projects have led to real estate goldmines in the peripheral suburbs of the city.

Somewhere in the 1980s and 90s, a large number of Mumbaikars shifted base from small homes (aka chawls) in South Mumbai to larger apartments in the peripheral areas. These northern suburbs in both the western and central belt soon started developing and now boast of impressive connectivity and lifestyle options for their residents. This trend gives us a clear picture of Mumbai’s appreciation potential and growth.

Cycle of development

According to Knight Frank's H1 2018 report, there was a 128 percent y-o-y growth in launches compared to the same period in 2017. A number of residential projects are being launched in the peripheral suburbs with developers trying to make homes affordable by offering smaller unit sizes. The average size of units in M M R has shrunk by 12 percent between 2013 and 2018, which has enabled a 10 to 15 percent drop in price.

Anuj Puri, Chairman, Anarock Property Consultants, says, "Appreciation values have remained somewhat stagnant, peaking at about 7 percent over three years. Realistically speaking, one can expect about 5-8 percent appreciation over this period, with an upper limit at prime locales depending on factors such as type of project, builder and amenities on offer."

Long-term prospects

Aashish Agarwal, Senior Director (head-consulting), Colliers International India, says, "Rents in preferred micro-markets of BKC, Andheri and Lower Parel are likely to strengthen by 5-6 percent over 2018-21 and vacancy is expected to reduce from current 13 percent." While the residential segment will probably have a longer recovery cycle, long-term investors should consider the macroeconomic environment and infrastructure investment. "With work at various stages of planning and execution on 8 metro lines, the Bandra-Versova sea link, coastal road, trans-harbour link, the rail network enhancement and the Navi Mumbai airport, along with the proposed Mumbai-Ahmedabad bullet train will involve billions of dollars of investment and trigger massive economic activity in the M M R region, leading to job creation and consequent real estate demand," adds Agarwal.

How to gauge the appreciation potential?

Track the price trends over the last couple of years;

Check the presence of social infrastructure like schools, hospitals and retail outlets;

Upcoming infrastructure development, such as new flyovers, metro stations, etc will lead to an increase in property prices;

Number of projects and developers in the area.

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Source:magicbricks.com