After decades of missed opportunities, CREDAI-BANM decides to go ahead with charting a plan to attract corporates to the city and create its own pull factors
Ramesh Nair, COO – Business & International Director, JLL India, and Ashwinder Raj Singh, CEO – Residential Services, JLL India
Developers in Navi Mumbai came together on May 16 under the aegis of Confederation of Real Estate Developers’ Associations of India and Builders Association of Navi Mumbai (CREDAI-BANM) to discuss the current status of real estate industry in the satellite city, how they can tackle challenges in dealing with different stakeholders and attract corporates to the city, which will lead to added demand for commercial, residential and retail spaces.
Devang Trivedi, president of BANM, started off by highlighting how developers had promised capital gains to investors and cannot bring down prices even in the current market scenario. He further noted that most developers in the city lacked an analytical approach to their work and that high-risk decisions were being taken on gut feelings alone.
The herd mentality that exists in the developer community of Navi Mumbai was lamented and he exhorted the fraternity to prepare for new challenges and changed realities by relying heavily on trends, insights, analysis and statistics provided by an international property consultant like JLL.
Ashutosh Limaye, national head of Research and real estate intelligence services (REIS) at JLL India, during his in-depth presentation, noted how Navi Mumbai could attract foreign investors positioning itself as an infrastructure-surplus city along with its status of being an educational hub in close proximity to Mumbai.
If Whitefield in Bangalore and Hinjewadi in Pune, which came into existence after Navi Mumbai, could be successful in creating IT hubs by attracting so many people and businesses, why could Navi Mumbai – with its superb infrastructure – not succeed in doing so? It was further pointed out that the ticket sizes and product offerings are not aligned to consumer needs and hence, the city is unable to tap its full potential.
There is no lack in demand, only a lack in supply of Grade-A product offerings. There has been a 52% appreciation in office rentals from the previous lowest levels seen in 2Q09. In the past, there have been healthy take-ups for Grade-A product offerings in the office space. Building-level infrastructure is not good in the city. Developers have been majorly focused on the residential category but only those who took help of research and insights have done well.
There is need to create credibility and proper branding around projects. There should be zero compromise on quality and corporate governance should be put in place to win private equity. Office leasing to the IT sector is around 40% of the total demand for leasing and foreign companies look for green, contemporary and energy-efficient buildings. Developers could focus on catering to such demand.
In the commercial space, Thane and eastern suburbs have been the push factors for Navi Mumbai but what the ‘satellite city’ misses is its own pull factor. The demand for residential property also depends on Mumbai. The need to create a positive brand (read pull factors), and not depend on push factors alone, was emphasized.
The presentation was followed by a panel discussion with Devang Trivedi; Mahesh Mudda, general secretary of Builders Association of India and CEO, NCCCL; Subrata Bandyopadhyay, CEO, L&T Seawoods Pvt. Ltd; Ramesh Nair, COO, business, JLL India; Ashwinder RajSingh, CEO, residential services, JLL India; V Suresh, director of Hiranandani Projects; Sanjay Kumath, senior VP, corporate strategy, Housing.com; Tapas Das, head – property and administrative services at L’Oreal India and moderated by Joy Sanyal, National Director, JLL India.
Key comments made by the panelists:
Ramesh: “People are impatient with the current government but should give them some time. India will see a lot of action – in the next two-three years – on different fronts, especially related to the bills and announcements made in the last two Budgets.
“This is a powerful group of developers but everyone is focused only on selling their own units. No corporate is ready to get into commercial property in Navi Mumbai. For this scenario to change, the city should be branded well and pressure should be put on the government to create jobs and office parks. This will lead to demand for residential and retail spaces too. A professional approach, branding with a clear focus on investors, strategic alliances/ partnerships along with corporate governance should be top priority for this group. The capital in real estate globally was $550 billion, last year, while India got only $1.5 billion of it. Let’s tap into this global capital pool.”
Mahesh: “A lot of positive change is happening at the national level since the time this government has come to office. They are laying down processes, tapping into global wealth and restoring lost faith in India internationally”
Devang: “The participative model of development was followed in the Navi Mumbai international airport project. If the same will be followed for NAINA, it wouldn’t see light of the day until all stakeholders have been bought on board. CIDCO cannot be the sole planning body for Navi Mumbai Airport Influence Notified Area (NAINA). A separate body is needed to plan the smart city; this cannot be a side activity of CIDCO. It is important to have the vision shared with the state government, villagers and politicians alike. Currently, there is no clarity or vision on the same. In the past, we have seen that with every new managing director of CIDCO, the vision and priorities have changed.
“Ministers are asking the industry to share our problems, looking for sustainable solutions to these problems and pushing bureaucrats to work. Unfortunately, bureaucrats are not acting up. They are still talking about how things would not work. I am, however, bullish and optimistic about the future as we have honest and committed ministers.
“Although buyers have started coming to Navi Mumbai out of their own will now, there is still an unsold stock of 1.25 crore sq ft in the city. Investors are largely out of the market as real estate cannot match the returns they expect in a short term. Another challenge is the huge supply in the periphery of the city.”
V Prabhu: “Navi Mumbai is one of the youngest cities in India. However, we have not catered to the youth here. In Europe, institutionalized rental markets are the norm. Young people, who cannot afford to own a house, go for these offerings. Very high quality apartments and studio apartments are available on rent unlike India, which only has houses being rented out by individual owners. Builders could look at institutionalizing the rental market.”
Subrata: “We will develop a transit-oriented development in L&T’s Seawoods project. The aim is to help people walk to their workplaces.”
Sanjay: “Navi Mumbai is like Rahul Gandhi, who wasted 13 years of opportunity presented to him and won’t get an opportunity to prove his leadership for the next 13 years. In other words, Navi Mumbai is a failed experiment, which could not realize its potential of being located so close to Mumbai. Buildings in Navi Mumbai look older than Mumbai. Most of them could soon go into redevelopment. Unless there is a change in the building infrastructure, people won’t move here.
“CIDCO is playing four roles in the city. In such a scenario, it cannot do justice with developers and businesses. Due to its focus on profit making transactions of auctioning land parcels at the highest possible rates has not helped ease the pressure on Mumbai’s housing.
“China has been able to develop 400 cities in 25 years. NAINA is an option, no doubt, but what about the 12,500 acres of salt pans that can bridge Navi Mumbai and Mumbai? Waterways could be developed in these areas. A look at Hong Kong and Singapore, in this respect, would help.”
Tapas: “When L’Oreal was looking for a one lakh sq ft Grade-A office space in Navi Mumbai, we searched for 3-4 months in vain. On the other hand, Pune and Bangalore gave us several options. Demographically, the city has 50-60% of highly-educated people working in MNCs living here. Yet, there is not a single multinational or corporate here.
“Navi Mumbai builders are not customer-friendly, whether the customer is an end-user or investor. The loading here is very high and the rental yield is low. Investors have not got returns that were promised five years ago on the basis of the upcoming airport and metro lines. Where is the airport or metro? Political interference in areas like Airoli needs to be stopped.”
Ashwinder: “Navi Mumbai should learn from Gurgaon, which is to Delhi what this city is to Mumbai. Gurgaon, which still doesn’t have a sewerage system, forget a good infrastructure, was able to brand itself so well that corporates and people shifted there in big numbers. Now one of the most struggling markets in the country, it was able to become a success story because there was just one developer, DLF, dealing with the corporates. Here, in Navi Mumbai, there are many builders and that didn’t help the city.
“Indians don’t like to go to places positioned as affordable housing locations. Branding makes all the difference and we should look at how India’s prime minister is branding India internationally. People in the other cities of India do not know about Navi Mumbai. Companies in Gurgaon will come to Navi Mumbai if you showcase this infrastructure to them.
“Developers should associate with leading brokers and advisors and earmark marketing budgets. Can we make Navi Mumbai the next ‘Silicon Valley of India’?”
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