Urban Investments In Mumbai

The growth story of India has many facets; one of the integral parts of growth and the arguably the most important one is urbanization

. In this fast growing world, Mumbai is significantly investing and employment generators which is carrying the growth momentum forward. Sustainability and livability of Mumbai depends largely on the quality of its infrastructure and real estate stocks. Mumbai city requires large sums of money to create urban asset stocks, including infrastructure and buildings.

Since last decade, Indias population has increased by 18% while its urban population grew at almost double that rate. The countrys share of urban population has increased by almost 3.5% over the last decade which is even more astounding is the increase in the built-up real estate stock in its town and cities.

Data shows from the 2001 Census that about 110 million Census Houses exist in the urban areas, which indicates an increased by 39 million over the last 10 years. In other words, the real estate stock market shows a compounding growth of 4.5% per annum as against the growth rate of 2.8% in urban population. So its been quite obvious that the massive growth needs adequate amount of infrastructure support including the residential property of Mumbai.

The state of affairs with infrastructure of Indian cities is not very encouraging most of the cities still have to deal with issues in terms of public transportation, storm water drainage, roads, solid waste management systems are among others on the regular basis.

The real estate stock market increasing inexorably in Mumbai cities, there is an acute problem with the basic needs like energy and water in the store for urban India. Today the private sector is contributing most in the development of real estate market with the responsibility of infrastructure development including the development of property in Mumbai lies squarely with public sector entities such as ULBs and other utility companies most of which are Government agencies.

The investment pattern in Mumbai shows a similar trend that the private sector invests in the development of real estate market while the public sector invests largely into infrastructure development. The amount of investments in most infrastructure projects is huge and the agencies responsible for its development are seriously under-financed.

Here funds are mobilized from private sources in the form of Public Private Partnership where the private sector generally tends to shy away from investments into city-level infrastructure projects as most of these projects are considered non-lucrative. They prefer to focus on investing into the development of real estate market or in residential property.

MUMBAIs Case Study

Mumbai being the Indias financial capital which attracts massive investments; largely in the real estate market. Mumbai city is the nations epitome of high real estate prices and land scarcity, huge sum of money chasing land in the city while the infrastructure augmentation lags behind. Opening up of FDI in real estate in year 2005 has opened the floodgate for investors vying for a share in the juicy pie that Mumbai real estate represents:

Prime Residential Property Launch:

As data indicates 2.5 Lakh dwelling residential property have been launched in Mumbai over the last five years and its still increasing today. Some of the residential property in Mumbai has been constructed and delivered while part of it is still under construction or as the approvals stage. For the sake of an argument, they consider the entire stock of dwelling residential property and the average investment for the land component per dwelling units, it works out to over a million rupees.

Investment Patterns in Land Over Time:

In term of investment the total amount of investment in South Mumbai leads the park followed by the Western Zone - primarily because of land auctions at BKC. The Eastern Zone attracted the least investments most of them into defunct industries along LBS Marg. CIDCO at Navi Mumbai has also been able to mobilize funds through the auction of plots at different nodes. The level of the infrastructure, economic activities and social amenities has pushed up the real estate prices of Mumbai and they are still rising. It is important to understand that the large volumes of investments in land have actually delivered a proportionate development of real estate markets in Mumbai.

by: lokeshmanu24

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