Data Labs Report: Navi Mumbai, An Emerging Real Estate Destination
Mumbai, India's most affluent city, contributes to more than 6% of India's economy. But, if its infrastructure were adequate, the financial capital of India would have been more prosperous. While this modern metropolis without a doubt deserves far superior infrastructure, one of the most fervent arguments against raising the floor space index (FSI) - the instrument that would allow buildings to get taller in Mumbai - also stops at its "woefully inadequate" infrastructure.
It is true that a high FSI would make certain parts of Mumbai denser. This is an argument that deserves sober attention. But, the costs of developing better infrastructure in Mumbai will be outweighed by the benefits of residential and commercial real estate becoming more affordable when the FSI is raised. Even if this is not so, the arguments in favor of developing infrastructure would carry much weight.
Most major cities in the world have a ring road or a rapid arterial road that allows residents to easily commute from one part of the city to another. But, Mumbai does not. Many urban policy thinkers have observed that Thane and Navi Mumbai are the only two areas in Mumbai where urban extension is possible. The absence of a developed road network makes it difficult to access these areas. Without transportation networks, it would be impossible to increase the supply of urban land in Mumbai.
Navi Mumbai: emerging frontier of urban extension
Navi Mumbai, decades ago, was proposed as city of size equal to that of greater Mumbai to decongest the South. In 1970, the state government established the City Trial Development Corporation (CIDCO) to develop Navi Mumbai. But, four decades later, in 2011, the population of Navi Mumbai was merely 1,119,477, according to the official Census report.
There is general agreement that, at initial stages, there was no coherent plan behind the development of Navi Mumbai. In spite of this, Navi Mumbai has been growing rapidly in the recent past. The overriding reasons behind the growth of Navi Mumbai are the economic reforms of the 1990's and greater connectivity with major parts of the city through railroads. But, it was only with the construction of the Markhurd-Belapur rail link and the Vashi ( Creek) Bridge that Navi Mumbai was connected to the main city for the first time in its history.
The big infrastructure push and the challenges
The Central government now plans to link the proposed -Mumbai highway, Creek, Bandra- Sea link and Nariman Point at a cost of Rs.90,000 Crore through a tunnel ring road. The CIDCO also plans to connect the Trans Harbour Link (MTHL) Bridge with International Airport (NMIA) through a coastal road to make the airport directly accessible. The NMIA will lead to massive investment and employment generation in Navi Mumbai. The expansion of Railways and a Passenger Water Terminal are also among the initiatives that might materialize soon.
Certain other initiatives are not likely to materialize very soon. The Trans Harbour Link (MTHL) , a Rs 11,000 crore project, is unlikely to be constructed by 2019 as it was expected. The MTHL is expected to reduce commuting time between Navi Mumbai and South Mumbai to 30 minutes and increase accessibility to the proposed Navi Mumbai airport.
As it is a city situated on a narrow peninsula, there is no other way to increase the supply of land available for development except through bridges and rapid ferries linking the peninsula to the main land. When it is fully constructed, vehicles can travel over the MTHL Bridge at 60 km/hour. In all major cities built around large bays, such bridges have turned the liability of being located on a peninsula to an asset. When the MTHL Bridge is fully constructed, this will happen in Mumbai too, and Navi Mumbai will be an area that benefits the most.
PropTiger Data Labs Report 2015: Key predictions
Real estate market in Navi Mumbai will see a revival: As has been the case with implementation of urban policies that are conducive to growth, urban policy experts now expect Navi Mumbai to grow faster than the other cities in the Mumbai Metropolitan Region (MMR) . Though the growth of real estate markets in Navi Mumbai was sluggish for long, it would soon witness a revival because the conflicts related to acquiring land for the new Greenfield airport were resolved in 2014. The construction of the NMIA is likely to begin in 2016 because environmental regulations and restrictions on constructing in the coastal zone have been delaying it for long.
New airport will generate jobs and fuel demand for homes: The Chhatrapati Shivaji International Airport has reached its peak saturation level. As it is difficult to upgrade the existing airport, it is important to build an alternative airport in Navi Mumbai to decongest it. According to CIDCO's estimates, the demand for air travel in the politan region would grow from 30 million passengers per year in 2012-13 to over 100 million passengers per year by 2030-31. Spread over 2,866 acres and built by CIDCO, the Navi Mumbai International Airport (NMIA) is one of world's largest 'greenfield' international airports. The NMIA is expected to generate 1.4 lakh jobs directly and 2 lakh jobs indirectly, attracting an investment of Rs 60,000 crore.
To facilitate planned growth in residential development around NMIA, CIDCO has planned the Airport Influence Notified Area (NAINA) city, spread over 600 acres, that comprises of 270 villages and 6 talukas. Many infrastructure projects that would improve the connectivity between Eastern and Western Express highways are in the pipeline. Two micro markets in Navi Mumbai, Kharghar and Dronagiri, will benefit greatly from such projects.
Kharghar and Dronagiri: Two Growth Corridors
The MTHL Bridge is likely to raise real estate prices in Dronagiri, Ulwe, Panvel, Kharghar and Taloja. The Multimodal Corridor from Virar to Alibaug that will pass through NAINA is also likely to raise prices in Kharghar, Panvel, Belapur, Vashi, Ulwe and Pen. The Passenger Water Transport (IPWT) will connect Western Suburbs and Navi Mumbai with Island city. Railways will also improve connectivity of Navi Mumbai with Island city and Mumbai suburbs. These modes of transport that would provide an alternative to suburban rail network of Navi Mumbai also will raise real estate prices in Belapur, Kharghar, Taloja, Navade, Kalamboli, Kamothe, Karanjade and Panvel.
Currently, real estate developers in Kharghar and Dronagiri are witnessing rise in inventory. So, they are likely to provide great discounts to home buyers. This makes residential units in these areas an attractive opportunity for real estate investors. While much of the demand for residential property is in Panvel, we expect Taloja, Ulwe and Kharghar to perform better in the near future.
The social infrastructure in Taloja and Kharghar is good. Both areas are well-connected to transportation networks. Residential property is the most affordable in Taloja. This region will be the closest to the upcoming airport in Navi Mumbai. Though the growth in new launches has been slow, prices of apartments in Taloja-Kharghar have been rising.
However, sales have been slowing down in Kharghar in the recent past, with rising inventory overhang.
In Ulwe, another growth corridor, prices have been rising, though the number of launches have been declining.
In Dronagiri too, sales have slowed down, though the inventory overhang is manageable.
Long-run Prospects
In the long run, real estate investors are likely to obtain high yields by investing in residential units in Navi Mumbai because it is ahead of other micro markets in Mumbai such as the Island city, Thane and Western and Eastern suburbs. The market is sluggish currently because land acquisition for the new airport was long delayed. But, constraints largely do not exist anymore, and because other infrastructural projects are near completion, real estate prices would soon appreciate in the area. Real estate investors who are keen on long term results would benefit from investing in Kharghar and Dronagiri.