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The favorable policies and connectivity infrastructure has resulted in the creation of new micro markets across Mumbai city and beyond. There have been many notable changes in residential and office spaces, suburban markets, and product quality over the past 10 to 15 years says Piyush Gupta, Managing Director - Capital Markets and Investment Services India, Col- liers, said, “Development of coastal road, Trans Harbour link, and metro connectivity will continue to alter the landscape of Mumbai real estate for years to come. When comparing Mumbai to other cities, it is evident that the potential for office spaces has not been fully exploited. Notably, commercial property prices on Thane Belapur Road have remained static for the past 15 years, unlike other markets in India that have experienced significant growth.”
Parvesh Sharma, Country Head India, Tishman Speyer India Private Limited, added, “Enhancing infrastructure is essential for creating more available land for commercial and residential use, which in turn impacts property values positively. Reduced travel time and improved connectivity will bolster Mumbai's growth and balance residential and commercial sectors. For the city to attract more occupiers over competing cities like Pune and Bangalore, it is essential to address factors such as affordability, and cost of living, necessitating support from both developers and the government.”
Ashok Mohanani, Chairman, Ekta World, stated, “Infrastructure development fosters decentralization, allowing residents to work and live in different parts of the Mumbai Metropolitan Region (MMR) without compromising convenience, evidenced by rising sales and registrations in both luxury and mid-segment residential sectors. Challenges are inevitable, but solutions such as redevelopment, and securing private sector funding offer a path forward. The emergence of alternative investment funds and quality-conscious developers provide a glimmer of hope for successfully navigating these issues.”
Talking about improving project quality in real estate Chintan Sheth, Chairman & Managing Di- rector, Sheth Realty, said, “Over the past two to three decades, Mumbai has witnessed substantial vertical residential development due to land scarcity, necessitating advanced construction techniques and expertise for high-rise buildings. Since Covid, the trend has predominantly shifted towards self-sufficient, gated community developments and large, self-sustaining townships. This shift has prioritized quality, design, and product-oriented approaches among developers, setting new market standards that emphasize superior construction and amenities. With MahaRERA mandating quality guarantee from developers, customer expectations have evolved positively, driving the demand for higher quality real estate offerings.” Sharing another perspective,
K Mukund Raj, Real Estate Expert, stated, “FSI in Mumbai has increased multiple times over the past decade, but supporting infrastructure re- mains a challenge. Particularly for commercial & retail, despite the lack of height or FSI restrictions, other constraints like parking and road network connectivity pose a difficulty. Therefore, large-scale commercial retail developments require policy support for DCR changes and the creation and enhancement of infrastructure to ensure their operational success. Developing mixed-use projects in the MMR area beyond Mumbai can create eco- systems that attract end-users and reduce governmental infrastructure burdens, thereby enhancing overall sustainability and living conditions.”
Rajat Rastogi, Chief Executive Officer- West & Commercial Assets, Puravankara Limited, added, “In Mumbai, land is the primary issue hindering mixed-use developments. While residential projects In Mumbai show promise, commercial development remains a significant challenge despite efforts in regions like the MMR. There is a policy ambiguity, especially regarding redevelopment schemes introduced by the government, yet significant infrastructure, new policies make Mumbai more attractive for developers from other cities.”
Vimalendra Singh, Chief Busi- ness Officer (Residential), Mahin- dra Lifespaces, said, “Maharashtra government has come up with commendable policies for Mumbai, where land is scarce and redevelopment presents a major opportunity, particularly along the Western line and extending to areas such as Vashi and Chembur. Acquiring a single land parcel of around 25 acres for a feasible mixed-use development is a big issue, considering space constraints and financial viability. With Navi Mumbai's rapid progress and strategic projects like Atal Setu and the metro line, we foresee decongestion of the city that could be assisted by government subsidies and schemes promoting development in under-utilized locations.”
EVOLVING CUSTOMER EXPECTATIONS
According to Govind Rai, Co-Founder & CEO, Insomniacs Digital Pvt. Ltd, said, “In the current digital era, a significant aspect of our work involves mapping cus- tomer intentions and sentiments. Despite elaborate efforts to impress customers, grand showroom presentations, I believe there's still a pervasive mistrust in the industry's ability to understand and value customer emotions genuinely.”
Jay Deliwala, Director, Kunvarji Realty Advisors, corroborated, “As real estate advisors, we address the customized requirements of each unique client by providing unbiased and timely advice, crucial to their decision-making process. Clients, especially those purchasing properties under construction, express concerns about on-time delivery and transparency throughout their journey. These factors are vital for end-users who expect a seamless experience in property dealings.”
Nirav Gosalia, Co-Founder, Re- alatte, added, “In the past 5 to 7 years, a notable shift in customer behavior has been observed; cus- tomers who once readily explored all options now prefer established brands due to time constraints and changing dynamics. Consequently, developers have transitioned from a project-centric approach to build- ing brand loyalty and delivering a consistent brand promise to ensure lasting customer relationships.”
Rahul Bansal, Co-founder & CEO, Propacity, shared his view, “The standard approach within our industry has been generic, often neglecting diverse customer psychologies and unique product demands. This underscores the necessity for a tailored customer experience model, particularly within emerging markets, where an understanding of niche products strengthens customer relations, enhances pricing strategies, and accelerates sales velocity. In both tier-one and tier-two markets, recognizing how customer experience impacts pricing and sales is crucial. It necessitates the creation of bespoke processes that cater to these unique requirements.”
Ashish Chhablani, Asst Vice President – Head Marketing MMR Region, Runwal, agreed, “Our engagement should extend beyond the purchase, ensuring continuous support until they take possession of their properties. The customer experience starts right from the initial search and continues through the actual visit to the site. Today, home buying is more personalized, where customers are very clear about their specific requirements. Additionally, it is crucial to engage all members of a household emotionally and digitally during various stages of the home buying process,”
Meet Merchant, General Manager – Marketing, Oberoi Realty, articulated, “No brand is more important than the customer, and any company that believes otherwise is delusional and on a downward trajectory. The real estate industry should focus on initiating conversations with customers from the very first touchpoint, using an omnichannel approach that combines both digital and physical interactions to provide a consistent and personalized experience throughout the customer's journey. This consistency, akin to the expectations set by brands like Volkswagen and Honda, can only be achieved through effective use of data.”
Vijay Kandhari, MD & CEO, B Kandhari Group, stated, “Transparency is essential for customer satisfaction, as concealing facts equates to dishonesty. In real estate, while technology enhances the process, the indispensable role of a reliable and approachable realtor remains critical for successful transactions. A good realtor not only ensures smooth dealings but also maintains future business relationships and facilitates satisfactory outcomes for both buyers and builders.”
NEW SHIFTS IN FINANCE & FUNDING
India's real estate finance and funding landscape, recently, has undergone significant shifts due to regulatory changes, technological advancements, and evolving market dynamics. These transformations have introduced new opportunities like alternative funding for developers and investors.
Shobhit Agarwal, MD & CEO, Anarock Capital Advi- sors Pvt. Ltd, stated, “At present, the real estate market is experiencing significant growth with volume and soaring prices. Besides, sales veloc- ities have increased markedly, with developers now measuring success in days rather than months. Consequently, the market is progressing at an unprecedented pace.”
Abdul Kader Suriya, CIO - SWAMIH Investment Fund, SBICAP Ventures Limited, said, “We handle challenging financing mandates for high-stress projects and have evaluated and funded numerous proposals, with over 1400 considered in the last four years. Key markets in India are experiencing significant highs in apartment registrations and price absorption, a trend that has accelerated post-COVID across commercial, residential, and industrial real estate sectors. However, stress persists in certain residential pockets due to factors like demand deficiencies, project viability issues, consumer litigations, and post-COVID cost surges. A recent report highlights over five lakh stalled units across 2000 projects nationwide. SWAMIH is an avenue that offers concessional capital aimed at completing these projects for the benefit of home buyers. Without it, given the cost of capital and expected returns from private pools, such financing will not be achievable.”
Regarding the shift in the private equity market, Anand Lakho- tia, Managing Director & Co-Head, Motilal Oswal Real Estate, shared, “There has been a significant transformation in the market from pre- 2020 to the present. With the right blend of brand execution, track record, appropriate product, and correct pricing, we have witnessed impressive sales at launch as well as ongoing sales and pricing enhancements. For instance, projects we invested in six to nine months ago are being launched at prices ex- ceeding our initial estimates for the next three to five years, indicating a positive market shift. Traditional financing methods are becoming less common, making fund-based borrowing a favored option for de- velopers, especially those seeking flexible financial structures over pure equity models.”
Ashish Mehta, Director, Ele- gance Realty Pvt Ltd and President AREA Group said, “I have been in the business of real estate marketing and investment portfolio for more than 13 years and have seen developers requiring funds, willing to pay interest rates of 24%, 28%, 30%, or 36%, but we generally avoid dealing with them due to the high difficulty in recovering our clients' funds. We typically provide funding to A-grade or B-grade developers who need interim financing for project approvals, with interest rates ranging from 15% to 18%. The short-term loan taken by the developer is solely for covering approval costs because, in Mumbai, financial institutions typically provide funds only post-approval, necessitating interim arrangements. We provide funding at both pre-RERA and post-RERA stages. For pre-RERA projects, we develop solutions to mitigate the impact of RERA regulations on the involved parties, often through tripartite agreements to secure our funds strategically. Additionally, we obtain allotment letters and pay stamp duty for certain distressed projects. Developers are now adopt- ing various structures, including pure financing, finance plus upside in residential or commercial projects, and equity sharing on an equal basis, instead of just fixed interest rates.”
Srinivasan Gopalan, CEO, Arisinfra Solutions Ltd, said, “There are still stressed projects in certain areas. Previously, we did not consider these projects due to uncertainty about their exit potential, but now the market supports us in funding them, ensuring good sales and pricing. We collaborate with developers and offer both financial and material support through our platform, while also managing sales mandates. Merely providing financial support is risky; hence, it's essential to have authority over financial management and escrow. aA balanced approach is required from both the funding and development sides, limiting land funding and emphasizing joint ventures between landowners and developers to ensure accountability.”
Talking about shifts in opportunities, Binitha Dalal, Founder & Managing Partner, Mt. K Kapital & Head of Fundraising, Rustomjee Group, said, “Today, the market appears stable, and the stress levels are not as high as previously perceived, with assets being considered bankable. Market stress is now reduced due to the rising demand and the capability to complete projects. As a development platform fund, we've maintained our focus on creating value through development capabilities. The ability to fund and complete projects is particularly fulfilling, despite the common belief that only funds profit while developer’s toil. Another way of generating funds is to go public. The decision depends on an organization's goals and their desired market position. Companies focused on niche markets, maintaining yearly square footage of 2-3 lakh may not benefit from entering public markets; they should consider unsecured funding instead. Organizations interested in partnerships, large scale projects and market growth should embrace becoming a listed company.”
STRATEGIES FOR MUMBAI REDEVELOPMENT
Redevelopment initiatives in India have become a pivotal element of urban planning, addressing the demands of an ever-increasing population. In context of Mumbai, Ritesh Mehta, Head – West, North and East, Residential Advisory Services & De- veloper Initiatives, JLL India, stated, “The city is currently experiencing redevelopment projects in every nook and corner. Hence, it is imperative to understand the challenges, successes, as well as failures of these projects for a holistic next step forward. While, a few high-net-worth developers can bid on large-scale redevelopment projects due to stringent requirements, there remains ample opportunity and room for all developers to operate and coexist.”
Elaborating on how the redevelopment projects can enhance the surrounding community, Nilabh Nagar, Senior Associate Architect, (AHC) Architect Hafeez Contractor, said, “Recent policies have promoted redevelopment in Bombay, creating wider roads in some areas, yet uniform expansion is hindered by pockets of undeveloped areas. Cluster redevelopment, incorporating multiple societies, has proven effective in enhancing infrastructure and benefiting entire neighborhoods. With high-end developers undertaking these projects, there is optimism that within a decade, Bombay can significantly improve its urban landscape and justify its high property prices.”
Ram Raheja, Director, S Raheja Realty, said, “Mumbai's redevelopment thrives due to the evolving Floor Space Index (FSI) regulations introduced by the government. In this densely populated city, there is a continuous demand for redevelopment due to limited land availability. And the 2034 Development Control Regulations (DCR) have significantly increased FSI, allowing plots initially built with lower FSI to be redeveloped with higher FSI, making it a profitable venture for developers unlike in other cities. However, when the FSI is excessively consumed for existing residents, it limits developer’s capacity to maintain sufficient inventory for sale. This results in stalled projects. The margins we achieve for the time and effort expended on a project are exceptionally low. The costs including bank guarantees, upfront premiums, rents to residents etc., affects the proportion of investment relative to sales, necessitating higher stock value in conjunction with land purchases.”
Dr. Adv. Harshul Savla, Managing Director, M Realty added, “Over the past 2 to 3 years, redevelopment has accelerated significantly, effectively completing a decade's worth of work, doubling the FSI due to beneficial schemes. Although redevelopment has increased the housing stock, a substantial portion of this supply is allocated to existing residents, limiting the actual increase in available housing. Consequently, despite multiple factors boosting redevelopments, such as reduced premiums and improved sales post-pandemic, housing prices continue to rise across various micro-markets, approaching a uniform price level throughout Mumbai, except in a few premium segments.”
Sharing his views if rental compensation are taxable or not, Advocate Sunil Ramani, Ramani Legal Pvt Ltd, stated, “There are cases identified where the judgments clearly state that transit rent is classified as a capital receipt rather than a revenue receipt. Importantly, a recent ruling reaffirmed that transit rent is not subject to tax deduction at source (TDS). Thus, the verdict conclusively indicates that no TDS should be applied to payments made by developers to tenants for transit rent. This should offset some of the expenditures by the developers. The major challeng- es in redevelopment are affirming land title and residents’ authenticity and finances due to strict funding guidelines by RERA and RBI."
Despite space constraints and high land costs, Mumbai remains a prime real estate hub with significant potential for high-quality developments. Also, increases in land prices and the dominance of major developers in the market have raised the quantum of funds needed substantially.
With NBFCs now regulated akin to banks, Alternative Investment Funds (AIFs) and platform- based micro-funding have taken precedence alongside traditional funding avenues that have long supported the industry.
It is time to develop specialized search platforms tailored to niche markets such as warehousing, luxury properties, etc.
Mumbai has limited greenfield projects left, thus making brownfield redevelopment the only viable option for real estate development in the city.
