Mumbai’s scars will take a long time to heal but its indomitable spirit is as strong as ever. Even as anger mounts over the recent blasts and the government’s inability to provide a safer city, there is a determination to not buckle under. It’s a strength that is reflected in the real estate industry, which is actively involved in the creation of this global city; as Anuj Puri, CMD, Jones Lang LaSalle says, “I can state with complete assurance that it takes more than a few terrorist attacks to bring this city’s real estate market to its knees.”
Despite its many shortcomings, Mumbai ranks high as a global investment destination, and it will continue to remain so. In December 2010, Urban Land Institute and Pricewaterhouse Coopers had surveyed 150 industry leaders across the Asia-Pacific and discovered that Mumbai, along with New Delhi, were the foremost real estate market destinations. The ULI-PwC report, titled ‘Emerging Trends in Real Estate and Asia-Pacific 2011′, found that residential real estate properties in Mumbai continued to maintain the growth momentum, as foreign investors still considered this market to be extremely viable.
Property watchers and developers believe that last week’s attacks have in no way shaken confidence in the city. Dharmesh Jain, CMD, Nirmal Lifestyle, says: “The fact is we are living in an age when these things are happening across the globe. I don’t think Mumbai’s image as an investment destination will be affected in any way.” Jain believes that in fact, this time, the government’s response was much better than the last time, when Kasab and his cohorts had struck fear in the city. “People keep talking about how Mumbai is a financial centre,” Jain adds. “But the greatest thing about this city is the spirit of Mumbai. The city is so resilient; even when the 1993 blasts took place, the next day Mumbai was back on its feet.”
Niranjan Hiranandani, MD, Hiranandani Constructions and VP and Co-chairman Mumbai Development, Committee, Indian Merchants’ Chamber, agrees. Hiranandani points out that while such incidents certainly disturb the economic peace which is the objective of the attackers, clearly - the fact is that they do not have much impact on investors, who have been seeing such incidents taking place around the globe. “Insurgency and the plague of such attacks are not just confined to India,” he believes. “Forget Pakistan, even stable countries have their unstable moments. I’m talking to investors all the time and they don’t even blink about such things any more.” However, adds Hiranandani, this does not mean it will not make a difference in future. “The government needs to take strong and concerted action before that happens,” he says.
Unless the government acts swiftly, Mumbai would certainly have a lot to lose. “As the economic powerhouse of the country, Mumbai is all set to become a major nerve center of global finance,” explains Manju Yagnik, Vice-Chairperson-Nahar Group. “In its wake, the city is moving towards its transformation to become a world-class city. While large connectivity related infrastructure plans are already being implemented, other important plans are on the anvil. These developments have opened up huge opportunities for the realty sector. All segments are exciting propositions for investors.”
Ms Yagnik points out that while these consist of about 20% of the realty sector, it is the huge 80% housing segment that is today creating waves in Mumbai. “Investors are aware that the gap between demand and supply for housing continues to widen rapidly in this mega city. They are also aware that the Government is keen on increasing the housing supply and is supporting mass and affordable housing, redevelopment of dilapidated buildings and slums, and is streamlining its process to encourage construction of residential complexes including mini and large townships within Mumbai and Mumbai Metropolitan Region. Investors therefore are not hesitating to invest further in the city’s realty.”
Mayur Shah, MD, Marathon Group, adds: “Apart from its importance as a global financial hub, the city is also undisputed leader in the various businesses such as Textiles, Gems and Jewellery and Bollywood, which makes it a most preferred real estate destination.” Shah believes that Mumbai is clearly the best performing and most active real estate market. “Barring some concerns about uncertain calamities, development potential for most of the real estate segments remains promising in the country’s commercial capital,” he says.
Living in Mumbai, many of us would have strong views on how unlivable the city has been becoming in recent times, but the fact remains that in sheer economic terms, Mumbai is often compared – and favourably – with other global cities.
Hemant Shah, Chairman, Ackruti City Ltd, comments: “Mumbai like New York, London, Paris and other international cities is an important business centre in the eastern part of the world. It is an important port, as well as a significant export centre for gems and jewellery to various parts of the globe, apart from the flurry of activities that go on in the two stock exchanges - BSE and NSE.”
He also observes that being the financial capital of India, every multinational and national company finds it imperative to set up its corporate head office here. “The entire entertainment industry, which includes film and television, modeling and advertising, operates here. All of these create tremendous job opportunities, which in turn create a need for housing, both for ownership and rental purposes; hence it is a good destination for investment in every asset class which includes property,” he says.
While we may take our time coming to terms with this most recent terror attack, at least from a real estate perspective, levels of confidence seem to be intact. As Puri observes, “All said and done, Mumbai will see an ongoing realignment of demand for real estate in terms of locations, typologies and investment horizons - but there is no potential for a generalized and prolonged drop in demand. This would only happen if India could offer a city that can compare with Mumbai - for investors in terms of vibrancy and lucrativeness, and for end users in terms of job opportunities, growth prospects and lifestyle potential.”