While Worli in Mumbai is now officially the fifth most expensive office location in the world, the residential property market in the financial capital remains several notches ahead of other metros. Lease rentals in Mumbai have reached an all-time high in the second half of 2006 with a growth of 15 per cent in premium south Mumbai areas and as high as 28 per cent rise in the extended suburbs.
A recent February 2007 survey on the Mumbai residential by global property consultants Cushman & Wakefield shows a steep, upward movement in rental values, which will continue this year. Property prices in the residential sector in Mumbai top the charts at the beginning of 2007, leaving Delhi a close second and the remaining metros far behind.
In the last six months, property prices in premium south Mumbai areas have gone up by 13 per cent and as much as 30 per cent in extended suburbs like Mulund, Malad and Kandivali. However, the Cushman & Wakefield report says that booking prices will begin slowing down, particularly in the premium category of projects under construction, because the number of prospective buyers for such high value apartments is limited.
Meanwhile, the forecast is that the rental market will steadily grow as demand will continuously outstrip supply in most parts of the city. Recent leasing transactions in Mumbai include a 4-bedroom apartment of 2,800 square feet on Kemps Corner for Rs 500,000 per month. Another 4 bedroom duplex apartment in Bandra (west) of 3,200 sq ft was leased out for a monthly rent of Rs 325,000.
Explaining the growth trend in the residential rentals in both the metros, Joy Gopal Sanyal, Vice president of Strategic Development Initiative, Trammel Crow Meghraj says the primary reason is substantial rise in economic growth and a parallel influx of people coming in to work in the cities. "Corporate lease transaction rates have particularly risen because of rapid salary growth in middle and senior management class employees where rentals are being included in the salary packages," said Sanyal.
In Delhi, rentals in 2006 have also continuously escalated in prime areas like Prithviraj Road, Aurangzeb Road and Chanakyapuri. A research report by Colliers International said that while property prices have gone up by almost 40 per cent in 2006, rentals have risen 30 per cent in most locations. Unlike Mumbai, which will continue to see rentals climb, Delhi is likely to see a slow down.
"Despite the growth in property value in both Delhi and Mumbai, you play almost double the price for the same property in the latter," said Pranay Vakil, chairman, Knight Frank India, another property consultancy firm. Comparing the two cities, Vakil says, an apartment in Worli could be Rs 30,000 per sq ft while you would get the same apartment in a posh south Delhi areas for approximately Rs 15,000-20,000 per sq ft.
"In Delhi, because of scattered business and industrial districts like Gurgaon and Noida, the growth has been steady and not steep as in Mumbai as the city is constantly expanding and supply is being added. Mumbai, on the other hand, is a peninsula and there is only so much that you can physically expand," he added.