Santhosh Kumar, CEO – Operations & International Director, JLL India
The election of the BJP Government at the centre was just the beginning. Now, political control of Maharashtra and Haryana – the country’s most crucial commercial nerve centres – is also on the charts, and there is every reason to anticipate an unprecedented pace of revival in these markets’ real estate sectors. This revival will be largely driven by an increased inflow of real estate investments through Public-Private Partnership (PPP).
Mumbai and Gurgaon have the lion’s share of the pie when it comes to the Indian realty market, and both these cities have been witnessing tremendous growth in absorption of commercial spaces over the past couple of years. With the burgeoning growth in population and migration of people from smaller cities to these areas, there is huge requirement of residential spaces as well.
In terms of percentage, both these cities combined account for 30-35% of the total Indian real estate market. The office space supply in Mumbai is slated to be as high as 30 million sqft. by 2018, with a value of around Rs. 700 billion. In terms of residential units, there are around 1.5 lakh units under construction till date, with an estimated value of around Rs. 2000 billion.
The office space supply in Gurgaon is expected to be around 20 million sqft. by 2018, with a value of around INR 200 billion. In terms of residential units, there are around 80,000 thousand units under construction till date, with an estimated value of around Rs. 500 billion.
The BJP government at the centre has already made it lucidly clear that it will provide focused impetus to infrastructure growth in the country. This effect will be further amplified by the party’s formation of the State governments in Maharashtra and Haryana, with infrastructure in these two states becoming the biggest gainers.
Major PPP Infrastructure PPP Projects Pipeline – Mumbai:
- The Navi Mumbai International Airport at Panvel
- The Mumbai Trans Harbour Link, which has been delayed since 2004, is expected to kick start
- Expansion of Mumbai Metro
Major PPP Infrastructure Projects Pipeline – Gurgaon:
- Expansion of the MRTS line in Gurgaon
- Various residential projects coming up in the city.
The major bottleneck for the real estate markets in these two cities has been the complex and lengthy approval procedures. Developers in both markets are largely cash-strapped and need better fund flows to come up with new supply. We are now looking at a potential end to this deadlock – with the BJP coming to political power in Maharashtra and Haryana, there will be sufficient grounds to expect that the party will focus on clearing up procedural delays arising from various complex norms.
The ensuing boost to growth will not be limited to just Mumbai and Gurgaon. Given the limited land available for development in the two cities and factoring in the BJP’s strong focus on faster and more holistic growth, there is now added impetus for development in their peripheral areas on the charts, as well. Infrastructure such as highways and MRTS projects which will connect these areas to their parent cities will automatically boost their real estate markets.