Residential
Delhi NCR & Mumbai
Mumbai residential market
is witnessing consistent new
supply of high-end residential
housing. A paradox, given that
developers across primary
cities in India have shifted
their focus to construction of
affordable housing.
DTZ conducted market
surveys across Delhi NCR
and Mumbai to unravel the
makings of this paradox.
Today when affordable housing is visibly
a new reality even in premium markets
of Delhi NCR, high end residential
market of Mumbai continues to grow.
DTZ takes a deeper look at the
format, price and scale of the existing
(apartment format completed since
2002) and upcoming Grade A residential
developments across these two cities,
to understand the composition of this
paradox and reasons behind it:
Log on to www.dtz.com to view the previous DTZ Alerts
Supply of Grade A Residential Units - Delhi NCR
Supply of Grade A Residential Units - Mumbai
Format of Development
Over the last 1-2 years, the supply of
more affordable 2 and 3 BHK units
has increased sizably in the premium
market of Delhi NCR i.e Gurgaon. In
contrast, high end market of Mumbai
concentrated towards South and
Central region, has seen a growth of
4 and 5 BHK formats in its upcoming
supply. This has been accompanied
by a corresponding decline in smaller
formats. The redevelopment and slum
India
DTZ Alert, Jan 2010, ISSUE - 11
Source: DTZ
Source: DTZ
rehabilitation schemes have given
residential development opportunities
in some of the prime locations of South
Mumbai.
This has resulted in increased focus
on creation of luxury and ultra luxury
products which has a dual premium
attached to it - product premium and
location premium. As a result, the
share of South Mumbai which currently
stands at 11 percent in the total stock
of Greater Mumbai today is likely to
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marginally increase to 12 percent in
the cumulative stock by 2012. Most of
this new supply is accounted by large
sized formats.
Further, small sized formats (1 BHK),
which has traditionally accounted for
a sizable proportion in Mumbai, has
fallen significantly in its overall supply.
In contrast Delhi NCR, devoid of such
small sizes earlier (in Grade A housing),
has started to accommodate these
formats. The phenomenon is more
visible in commercial markets like
Gurgaon and Noida, to increase
affordable housing options for the
increasing service class population in
these locations.
In addition, the average size of
apartments in the upcoming supply
has corrected across all formats in
Delhi NCR. While in case of Mumbai
this correction was only visible in
large 4 and 5 BHK units to arrest
an exuberant unit cost during the
slowdown. However, after a short
pause, the residential market of
Mumbai is again gearing to offer
improved sizes even in the high end
formats (4 and 5 BHK). On the other
hand, average sizes in smaller formats
(1-3 BHK) have increased in Mumbai
during the same period.
Price of Development
In terms of pricing, the per unit price
of an apartment in South Mumbai is
not even close to a per unit price of an
apartment in Gurgaon. The average
price level of a residential market of
Gurgaon has moved from INR 2800
to INR 4000 per sq ft between, 2005
Log on to www.dtz.com to view the previous DTZ Alerts
to 2009, a rise of 43%. Some of the
premium apartment projects are
currently getting quoted in the range
of INR 8500-11000 per sq ft, after
reaching their peak of INR 15000 per
sq ft in 2008. While during the same
period average price level in South
Mumbai has moved from INR 12,000
to INR 25,000 per sq ft, a rise of over
100%, with some of the premium
projects currently getting quoted
upwards of INR 50,000 per sq ft.
The residential market prices in Delhi
NCR are currently stable, however,
downward pressure continues to
persist. On the other hand Mumbai
markets have started to show signs
of strengthening, witnessing a price
appreciation in the range of 10-15%
during the last quarter of 2009. Despite
the current state of price stability,
Delhi NCR is yet to see full buying
momentum even within affordable
category (with limited activity in high
end markets), while there has been
a visible revival of buyers’ interest in
Mumbai including high end residential
markets.
Scale of Development
Given the fact that the population size
and dynamics of Mumbai are stronger
than Delhi NCR, the considerable
difference observed in the scale and
volume of development between
the two cities explains this peculiar
behavior of Mumbai residential market
in terms of its format and price.
The current stock of nearly 55,000
Grade A housing units in Delhi NCR
is gearing to increase by four times
with nearly 165,000 additional units in
the pipeline scheduled for completion
by 2012. Compared to this scale,
with a present stock of nearly 57,000
units, Greater Mumbai is gearing for
32,000 additional units during the
same period. Even after adding a
comparable supply volume of Navi
Mumbai, the scale of supply addition in
whole of Mumbai is significantly lower
(by nearly 60%) compared to entire
Delhi NCR.
Given an insatiated demand for
housing in a dense market like Mumbai
and more importantly for quality
housing, the opportunity is sufficiently
large for developers to continue to
focus on high margin products or,
improve margins in an otherwise
‘should be affordable products’.
This also explains the unexpected
resilience observed recently in the high
end segment in sync with the overall
appreciation in the residential market
of Mumbai. This is happening when
otherwise important markets like Delhi
NCR are at best hoping to stabilise
even within affordable category,
reinforcing our belief in the high end
story of Mumbai
For more information, please contact-
Divya Pall
Regional Manager
Marketing Communications - India
divya.pall@dtz.com
Our Offices in India
Delhi NCR + 91 124 459 7500
Mumbai + 91 22 4223 1600
Bengaluru + 91 80 4123 1600
Chennai + 91 98459 96281
www.dtz.com
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