It used to be location, location, location.Now, at least in Mumbai, the high-end real estate business is all about infrastructure, infrastructure, infrastructure.
As top industry members gathered at the Hindustan Times Luxury Realty Conclave on Wednesday to discuss whether Mumbai was ready for high-end real estate, the consensus was that builders and the government will have to work together if they are to offer true luxury lifestyles in a city notorious for its overburdened infrastructure.
In terms of price, Mumbai stand shoulder-to-shoulder with top luxury markets such as London, Paris and Milan. In terms of quality too, Mumbai’s realty industry is closing the gap. The only weak link is the city’s infrastructure, which is nowhere near international standards.
“In one of my luxury projects, we still have to get water from tankers because there is no water available from the government,” said Sandeep Runwal, director of Runwal Group. “Even in some of the best buildings in the city, basic infrastructure is still an issue.”
Despite these issues, and despite rising prices, the luxury segment is still generating considerable interest among consumers, leading some developers to suggest that perhaps the industry should take the initiative and try to address infrastructure problems as far as possible.
“When we went to seek permission for a luxury tower [in Parel], the government said its infrastructure was not capable of handling the sewage that would be generated. So we proposed a sewage treatment plant,” said Kailash Agarwal, chairman of Nish Developers. “In this way, we have reduced the burden on government infrastructure.”
There was also some debate about the use of the term ‘luxury’, with industry experts pointing out that a large chunk of the projects built in Mumbai over the past year had been so pegged.
“About 65% of the apartments launched in the city were positioned as luxury projects,” said Sanjay Dutt, CEO of real estate consultancy Jones Lang LaSalle India.
Added Dharmesh Jain, chairman and MD of Nirmal Lifestyle: “Every area should have its share of affordable homes too, since people born and brought up in the area would like to stay on in some cases, rather than go to another area.”
Meanwhile, the next step for the luxury realty market, developers said, will be more projects featuring international designers and global luxury trends. They admitted, however, that, more often than not, even the luxury apartments in the city were far less spacious than those in the same segment in New Delhi.
Admitting that the space crunch is an integral aspect of Mumbai’s real-estate market, developers suggested that the government takes definitive steps to allow for more growth.
“If the government makes certain construction guidelines clearer, then I am confident that the real-estate sector could generate a revenue of Rs50,000 crore for the state government in a year,” said Jain.