Ramesh Nair, COO – Operations, Jones Lang LaSalle India
With the development potential of Mumbai’s Western Suburbs almost fully exploited, we are witnessing increased momentum in new developments in the Eastern Suburbs where land parcels are still available and prices more affordable. As a result, the 16.8 kilometre-long Eastern Freeway that connects P. D’Mello Road in South Mumbai to the Eastern Express Highway at Ghatkopar has now sprung into sharp focus with developers.
The implications in terms of demand, supply and price are considerable. We have seen a steady increase in inquiries for residential and commercial spaces close to the Eastern Freeway’s entrance and exit ramps, and developers have begun marketing their projects with an emphasis on their proximity to this key arterial route.
In Chembur, property prices have risen by as much as 25% over the past two years primarily because of this area’s advantageous juxtaposition to the Eastern Freeway. Also, markets such as Kanjurmarg, Kurla, Powai and Ghatkopar saw residential property prices rise by 32%, 29%, 27% and 23% respectively in 2012. This year-on-year increase in prices is also attributable to reasons such as the increase in superior quality projects with innovative concepts in these areas. LBS Marg has seen the arrival of luxury hotels such as Radisson Blue by Rajesh Builders and Novotel by Nirmal Group.
In fact, the property market in the CBD – currently on a decline – will also get a fillip because of the drastically reduced inward-bound commuting time. Improved road connectivity between Thane-Navi Mumbai with the CBD will result in an increase of residential project launches for the same reason.
The completion of the Santacruz-Chembur Link Road will cause more traffic coming in from the North side of the secondary business district of Bandra Kurla Complex. This will trigger a fresh spate of developments in the catchment areas surrounding the alternate route to the Central Business District.
With the improved connectivity of the Eastern suburbs, we will see these areas gradually attracting the commercial space requirements previously aimed at other micro-markets as long as the rates remain favourable. Such a relocation trend has already been witnessed in SBD North from other markets. This trend will become even more visible once the current lease periods expire.
There will also be further eastward movement of real estate development into locations like Sewree. However, it is the areas closest to the Eastern Freeway’s entry and exit ramps – specifically, Orange Gate, Anik Junction, Chembur-Mankhurd Link Road and Panjarpol Link Road – which will emerge as the stronger locations. Thanks for the new impetus, the real estate markets in these areas, which see high residential property absorption, will also see greater demand and consequently upward pricing momentum.
Going forward, the prices in the Eastern Suburbs are expected to rise at the rate of10-12% year-on-year over the next two years. A number of developers launching new projects are using the development of the Eastern Freeway as a marketing tool by highlighting the reduced commuting time to South Mumbai from peripheral locations. Over the mid-term, properties in Wadala will also see a marked increase in value due to the combined influence of the Eastern Freeway and the fact that the MMRDA is fast-tracking this area’s development as a Business District.
In the long term, certain land parcels currently held by the Mumbai Port Trust could eventually be released for development. If and when this happens, the presence of the Eastern Freeway will ensure that these land parcels will attract considerable premiums. There is also a possibility of many industrial units present in the catchment areas of the Eastern Freeway moving out, further augmenting the supply of prime property for commercial and residential development along the Eastern Freeway.
Micro-Market Impact:
- South Mumbai may witness a small jump in absorption, considering the improved accessibility. Close to 35,000 vehicles travel on the Eastern Freeway each day.
- Central Mumbai will witness some acceleration in supply and absorption, and a moderate jump in rental/capital values.
- BKC will see moderate impact, which could improve once the Santacruz-Chembur Link Road (SCLR) comes up.
- Andheri will show, if at all, a mild negative impact because the Eastern Suburbs would now compete with it as an option for real estate.
- The Western Suburbs will largely remain unaffected by the Eastern Freeway, but the contrast between Eastern Suburbs – where a number of infrastructure projects are being undertaken – and the crowded Western Suburbs might become more pronounced, resulting in price pressure in the Western Suburbs.
- The Eastern Suburbs will see the maximum impact, with a sizeable increase in supply, absorption and rental/capital values across all segments.
- The Thane-Navi Mumbai market will experience positive movements, primarily in the residential market, with a lag effect on the commercial market.