With the development potential of Mumbais western suburbs almost fully exploited,there is now an increased momentum in new developments in the eastern suburbs where land parcels are still available and prices more affordable. As a result,the 16.8 kilometre-long Eastern Freeway that connects P DMello Road in south Mumbai to the Eastern Express Highway at Ghatkopar has now sprung into sharp focus with developers.
The implications in terms of demand,supply and price are considerable. There is a steady increase in inquiries for residential and commercial spaces close to the Eastern Freeways entrance and exit ramps,and developers have begun marketing their projects with an emphasis on their proximity to this key arterial route.
In Chembur,property prices have risen by as much as 25 per cent over the past two years primarily because of this areas advantageous juxtaposition to the Eastern Freeway. Also,markets such as Kanjurmarg,Kurla,Powai and Ghatkopar saw residential prices rise by 32 per cent,29 per cent,27 per cent and 23 per cent respectively in 2012.
This year-on-year increase is also attributable to reasons such as the increase in superior quality projects with innovative concepts in these areas. LBS Marg has seen the arrival of luxury hotels such as Radisson Blu by Rajesh Builders and Novotel by Nirmal Group.
In fact,the property market in the central business district (CBD) currently on a decline will also get a fillip because of the drastically reduced inward-bound commuting time. Improved road connectivity between Thane-Navi Mumbai with the CBD will result in an increase of residential project launches for the same reason. The completion of the Santacruz-Chembur Link Road will cause more traffic coming in from the north side of the secondary business district of Bandra Kurla Complex. This will trigger a fresh spate of developments in the catchment areas surrounding the alternate route to the CBD.
With the improved connectivity of the eastern suburbs,these areas will gradually attract commercial space requirements previously aimed at other micro-markets as long as the rates remain favourable. Such a relocation trend has already been witnessed in the secondary business district from other markets. This trend will become even more visible once the current leases expire.
There will also be further eastward movement of real estate development into locations like Sewree. However,it is the areas closest to the Eastern Freeways entry and exit ramps specifically,Orange Gate,Anik Junction,Chembur-Mankhurd Link Road and Panjarpol Link Road which will emerge as the stronger locations.
Thanks to the new impetus,the real estate markets in these areas,which see high residential property absorption,will also see greater demand and consequently upward pricing momentum.
Going forward,the prices in the Eastern Suburbs are expected to rise at the rate of 10-12 per cent year-on-year over the next two years. A number of developers launching new projects are using the development of the Eastern Freeway as a marketing tool by highlighting the reduced commuting time to South Mumbai from peripheral locations. Over the mid-term,properties in Wadala will also see a marked increase in value due to the combined influence of the Eastern Freeway and the fact that the MMRDA is fast-tracking this areas development as a business district.
In the long term,certain land parcels currently held by the Mumbai Port Trust could eventually be released for development. If and when this happens,the presence of the Eastern Freeway will ensure that these land parcels will attract considerable premiums. There is also a possibility of many industrial units present in the catchment areas of the Eastern Freeway moving out,further augmenting the supply of prime property for commercial and residential development along the arterial road.
The Western Suburbs will largely remain unaffected by the Eastern Freeway,but the contrast between Eastern Suburbs where a number of infrastructure projects are being undertaken and the crowded Western Suburbs might become more pronounced,resulting in price pressure in the Western Suburbs.
The Eastern Suburbs will see the maximum impact,with a sizeable increase in supply,absorption and rental/capital values across all segments. The Thane-Navi Mumbai market will experience positive movements,primarily in the residential market,with a lag effect on the commercial market.
The author is COO Operations,Jones Lang LaSalle India