Take-off problem

Ranjita Ganesan | Mumbai -

Take-off problem

Ulwe, an ensemble of mostly unfamiliar villages, bang in the middle of Navi Mumbai, owes its fame to the proposed airport in its vicinity. Anticipation had led property prices to climb 30 per cent in the past five years, local land owners and small builders stepped in to develop the area. However, as the airport project coughs, sputters and struggles to take off, investors have started keeping away from certain underdeveloped parts of the satellite city.

In the nascent Ulwe node, prices have fallen by 20 per cent recently. The interest here and in other fledgling areas was mostly from investors and not end users. "Land is available in plenty in Ulwe, Dronagiri, Taloja and Kalamboli, but basic infrastructure is poor. Enquiries have reduced in the last couple of months," says Aziz, a consultant at Silver Properties. Per square-foot rates in Ulwe have dropped from the previous Rs 5,100 to Rs 4,000. This price will likely recover only with advances in other infrastructure projects. "We still have hopes for the Mumbai Trans Harbour Link (MTHL) and a railway station to come up," says a local builder.

Elsewhere in locales like Kharghar and CBD Belapur, prices have remained stable on account of better amenities and the presence of good schools and retail outlets. The developers here too are more trusted than the typically unknown, first-time builders operating close to Ulwe. Those who invested in other flourishing neighbourhoods like Nerul, Vashi and Sanpada too can rest easy as rates there are still on their way up. Most builders blame increasing prices on the City and Industrial Development Corporation (CIDCO), Navi Mumbai's planning authority, which keeps a strong leash on land parcels and puts them on the block slowly. In 2012, competitive bidding reportedly resulted in CIDCO getting Rs 123 crore for two plots in CBD Belapur, over three times more than the base price.

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The promise of an airport may have turned elusive but the initial enthusiasm had boosted land prices and allowed builders to increase their rates steadily. Houses in most localities in Navi Mumbai became less affordable over the years. "As land prices escalated, the viability of new projects became a large question mark," says Rohit Poddar, managing director, Poddar Developers. "(But) projects continued to be launched by developers who had purchased land earlier at substantially lower prices." These developers are said to have earned enviable profits. Prices have risen by a phenomenal 70 per cent in the region for the past three years. A 2BHK in Vashi or Nerul now costs between Rs 50 lakh and Rs 1 crore, nearly in line with rates in parts of Thane and Mulund.

However, experts foresee development to slow down, especially in the newer districts of the satellite city. "There is a 26-month supply of unsold inventory in Navi Mumbai," points out Ashutosh Limaye, head of research and real estate intelligence service, Jones Lang LaSalle. "Concrete new launches are likely to stop for some time." Transactions in Navi Mumbai have reduced because most buyers cannot afford the homes, says a real estate agent. Higher input expenses - labour, cement and steel - as well as procedures to secure environment approvals have further raised costs. "Under these circumstances, the developer will find it very hard to reduce rates by anything that will be considered significant by customers," says Poddar.

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"All the development in Mumbai is moving northwards," says Naushad Panjwani, senior executive director, Knight Frank. Of the three zones in the north - Kalyan, Dahanu and Navi Mumbai's Panvel - the last is preferred as it is more scenic, cleaner and has sound infrastructure. It is also accessible from Mumbai, Thane and Pune. Unlike neighbouring Mumbai, Navi Mumbai (developed in 1971) was not clumsily assembled. Its roads and areas of residence were planned neatly and continue to draw interest from NRI buyers. In recent years, Navi Mumbai has moved from being a hub for "affordable" housing to "relatively affordable" housing. Options that can be called a bargain are available only in faraway Panvel and beyond. There are chances that prices could soften in that district, some say. It is still developing and as more builders try to capture the market, discounts will likely be offered.

Demand has not faded but houses in better locations are moving out of reach for middle-class pockets. This is said to have prompted more people to live here on rent. A case in point is Atika Singhal, who moved to Mumbai after marriage and could not afford to buy property immediately. "When my husband and I planned to shift to our own apartment, I went crazy checking the rentals in Mumbai," says the public relations professional. "Being from Delhi, I am habituated to living in big houses, and the apartments either seemed very small or way too expensive." The couple settled on a 1BHK in posh Seawoods for Rs 14,000 a month. Still expensive but not as pricey as match-box flats in Bandra or Andheri.

Despite the uncertainty, the airport is still a prominent part of developers' marketing efforts. Each project usually highlights its proximity to the site in terms of kilometres. Environmental and other clearances, and negotiation with locals have delayed the airport construction on several occasions. Six years after it was launched by the Ministry of Civil Aviation, state government officials revealed recently that they were still trying to sort out terms with project-affected persons. It is now expected to be completed towards the middle of 2017.

The proposed airport capacity was increased to handle 60 million passengers per annum from the earlier capacity of 40 million passengers per annum. Project costs too shot up by a record 305.76 per cent to Rs 14,573 crore in 2011-12, compared to Rs 4,766 crore in 2006-07. However, some builders, including Devang Trivedi of Progressive Group, are confident that the major infrastructure projects will be completed because of the cash rich position of Navi Mumbai's two governing bodies, CIDCO and Navi Mumbai Municipal Corporation (NMMC). "While the projects face other hiccups, we know that they will not be dropped for financial reasons."

Observers say benefits of the airport and other infrastructural efforts will reflect in 10 years' time. Navi Mumbai prices are expected to grow steadily at 20 per cent each year. But should they soften, people like Singhal are waiting to pounce.