Was commercial,went residential

In 2008,90 per cent of the 9.5 m sq ft commercial space was picked up in the market. A year on,50 per cent of the 10.6 m sq ft of new supply is lying unoccupied. This has sent developers back to the drawing board. According to Liases Foras,about 4 m sq ft of proposed commercial and retail space in Mumbai has seen such a change last year.

DB Realty had reworked its plan for the country’s biggest mall in Dahisar into residential by the time the work began last August. Arvind Nandan,executive director,occupier services group,at Cushman and Wakefield,said,“For more than a year,the demand for commercial and retail space has been wobbly. When the market started recovering six months ago,residential became the safest bet.”

The business district of Lower Parel has recorded the country’s highest decline in rentals: 40 per cent. The contours of several projects here are being redrawn. Indiabulls,which is building IT parks on the Jupiter and Elphinstone Mill lands,is also launching three super-luxury residential projects on these plots. Market sources say the DLF IT park on Mumbai Textile Mills is expected to follow suit.

Orbit Corporation has scrapped its proposed Hafeez Contractor House project in Lower Parel and is turning it into residential. Orbit has also re-launched its proposed IT park at Sakinaka as a residential project. The spurt is also the outcome of the policy of granting an FSI of 4 to those building public parking space in their residential projects.

Deepak Singh,director of consultancy agency Morris and Troy,said funds for residential projects are raised from both investors and end-users even before construction begins. “In commercial or retail projects,the money often comes in only after construction.”

The increase in residential units doesn’t necessarily harbour good news for home buyers. After a gap of two years,realty IPOs started off again with Godrej and DB recently. At least 11 others,including Lodha,Neptune and Sahara Prime,are expected to launch their IPOs soon. “The IPO concentration in the market will lead to higher valuations meant to entice investors. Public sector banks alone have funded developers to the tune of Rs 91,000 crore until March 2009. No one bothers to generate money from sales,” said Pankaj Kapoor of Liases Foras.