Data Labs Report: Three Regions That Will Be Investment Hubs
While driving on the roads, we do not usually feel pangs of guilt. But, in Mumbai where there are nearly 700,000 cars on the roads, perhaps an examination of conscience is in order. In South 's Null Bazar, where the average street area per person is 1.7 sq mt, vehicles impose huge costs. Ox carts come at a price too. Transport is a real estate problem, but urban planners rarely see things this way.
A parked car consumes nearly 14 sq mt of area. A car that travels at 30 km per hour consumes 65 sq mt of area. In New York Mid-town, where the average street area per person is 33.3 sq mt, a car that travels at 30 km per hour barely occupies the space of two people. In Mumbai, it occupies the space meant for 38 people. In the past eight years, the number of cars on Mumbai's road have grown by 57 per cent. Mumbai's existing infrastructure seems to be crumbling with its growing population.
But here is the good news: PropTiger Data Labs report on Mumbai, released in July 2015, points out that Mumbai is undergoing massive infrastructure overhauls to de-congest the city, which is all set to spawn three new growth corridors in the city: Andheri, Mulund-Bhandup and -Ghatkopar.
The Big Push
The Mumbai Metropolitan Region Development Authority (MMRDA) and the Maharashtra State Road Development Corporation (MSRDC) have proposed measures to decongest the city. The coastal road project that stretches over 36.5 km will reduce the commuting time between Nariman Point and Kandiwali by an hour at a cost of over Rs 10,000 crores. While the proposed Rs 11,000 crore Trans Harbour Link (MTHL) and the integrated passenger water transport (IPWT) system, would reduce the commuting distance between the Island City and Navi Mumbai.
Mumbai can afford such investments because this is merely a fraction of Mumbai's annual contribution to Maharashtra's economy.
The proposed tunnel road that links -Mumbai highway, Creek, Bandra- Sea Link and Nariman Point too would shorten the commuting distance between Navi Mumbai and Island City. The Versova-Bandra Sea Link, also known as the Western Freeway, would reduce the load on Western Highway and Western Highway. Three new lines of Railways too will vastly improve connectivity. On the other hand, the Mumbai bus rapid transit system will improve the connectivity of eastern suburbs.
It is stipulated that the coastal project might be completed within three years and the IPWT by 2016, though the MTHL is unlikely to be completed by 2019. This is true of the multi-modal corridor too, of which the completion time is not yet certain. Additionally, Mumbai metro lines 2 and 3 are expected to be commissioned by 2021.
Mumbai's infrastructure, with these projects planned and underway, is set for a transformation, making the city a more efficient labour market where most people are located not too far from their office and other areas of importance. When this happens, the three new growth corridors - Andheri, Mulund-Bhandup and -Ghatkopar, would inevitably emerge.
Why is Andheri emerging as a growth corridor?
The reasons are a plenty. cently, construction of the Versova-Andheri-Ghatkopar metro was completed. trial areas like the Marol MIDC trial Area, Santacruz Electronic Export Processing Zone (SEEPZ) , Chakala trial Area and Technopolis Knowledge Park are in Andheri East while trial Area is in Andheri West. Andheri is one of the areas that would benefit from the coastal road project, along with Versova, Kandiwali and Nariman Point. Andheri is also one of the five areas that will benefit from the IPWT or “water metro”.
al estate investors and developers are yet to fully see Andheri's potential, though the number of residential units launched have been rising almost consistently since 2008. In Andheri corridor, from 2008 to 2013, the number of residential units launched grew from 389 to 4,457 (1.1) . In 2014, however, this declined to 3,122. The weighted average base selling price (BSP) of apartments in Andheri rose from Rs 8,382 per sq ft in 2008 to Rs 16,638 per sq ft in 2015 (1.1) per sq ft (Weighted average base selling price is the average price of apartment units weighted on the number of BHK units in respective projects.) But, the residential units sold in the Andheri corridor declined from 1,010 to 336 in the past 12 months (1.2) . In the same period, consequently, inventory overhang grew from 11 to 28 (1.2) .
1.2 Even though sales have been declining and inventory overhang rising, investors are yet to appreciate Andheri
The Mulund-Bhandup
The Mulund-Bhandup corridor will see a revival too, as the LBS Marg corridor in the Bus Rapid Transit System (MBRTS) will connect Mulund and Ghatkopar. Bhandup is also an industrial area. In the Mulund-Bhandup corridor, new launches have been fluctuating since 2008. (1.3)
But since 2012, new launches have been growing consistently. In 2008, the number of new launches was 1,455. In 2010, this grew to 8,040. But, in 2012, this declined to 1,462. But, soon enough, the number of new launches started rising, reaching 5,294 in 2014. The weighted average BSP of apartments in the Mulund-Bhandup corridor rose from 5,465 in 2008 to 14,085 in 2015 (1.3) . Sales in the Mulund-Bhandup corridor have risen too, from 801 in Q2 of CY 2013 to 1,142 in the Q1 of CY 2015 (1.4) . The inventory overhang fluctuated during this time, from 25 in in Q2 of CY 2013 to 25 in the Q1 of CY 2015 (1.4) .
-Ghatkopar is another emerging growth corridor. Like the Mulund-Bhandup corridor, this growth corridor too will benefit from the LBS Marg corridor that would connect Mulund and Ghatkopar. This area would also benefit from the -Wadala monorail and Santacruz- Link road. Not surprisingly, Chembur and Ghatkopar receive the greatest number of enquiries among the eastern suburbs.
The residential units launched in -Ghatkopar corridor grew from 202 in 2008 to 3010 in 2014 (1.5) . The weighted average BSP of residential units in the -Ghatkopar corridor too rose from 7,989 in 2008 to 16,510 in 2014 (1.5) . The inventory overhang in this region is merely one and a half years, which is lower than the average in the eastern suburbs (1.6) . The sales of apartments in -Ghatkopar grew from 617 in Q2 of 2013 to 710 in the Q1 of 2015 (1.6) .
The Big Picture
How does the emergence of these three growth corridors fit in with Mumbai's growth story? Urban planners repeatedly fail trying to adapt a city to transportation networks while it should have been the other way round. But, in Mumbai, it is easier to adapt transportation networks to the city. Even as mass transit has a tendency to fail in cities, it actually works very efficiently in Mumbai.
For mass transit to be the dominant mode of transport, there should be at least 30 people per hectare. Mumbai, one of the densest cities in the world, has 3,230 people living per hectare. Moreover, when compared to other cities, Mumbai's urban space is more mono-centric. This, again, fits in well with mass transit system because the catchment area of the main mass transit corridor should be large. In most other cities, designing transportation networks according to the specific needs of each locality is a chore. Mumbai is a city were a one-size-fit-all solution works.
Mumbai is almost there, but not quite. Even though Mumbai is relatively more mono-centric, the catchment area of Mumbai's existing Central Business District (CBD) is not large enough. Within 10 km of Mumbai's existing CBD, there are only 2 million people. Far less dense cities have far more people at a similar distance from where the main transit station could be built. But, as the Bandra Kurla Complex (BKC) is emerging as Mumbai's de facto CBD, this constraint too would be overcome. There are nearly 5 million people around 10 kms from Bandra, according to recent estimates. Moreover, the floor space index (FSI) in the Bandra complex is 4, while it is 1.33 in much of the Island City. (Floor space index is the ratio of floor area to land area.)
A high FSI along main transit corridors is conducive to transit oriented development. But, as PropTiger Data Labs report on Mumbai points out, South is losing its unchallenged status as Mumbai's most happening area as corporations move to the BKC and surrounding areas. Constraints on Mumbai's urban development are slowly disappearing and real estate investors have much to gain in future.