Land has always been at a premium in Mumbai and now, it has started to pinch the pockets of even real estate developers. With fresh land parcels becoming hard to come by, the city’s developers are now increasingly looking at redeveloping old and dilapidated buildings to build their projects.

Luxury Housing through Redevelopment

Most developers agree that given an option to choose, they would prefer fresh land over the redevelopment model for their luxury projects. However, soaring land prices especially in premium locations such as South Mumbai have left them with little choice. The only other option is to go further away from the city to find cheaper land parcels, but then they have to deal with weak infrastructure and long commutes – both of which can turn off potential home buyers. That is why big name developers like Tata Housing, Godrej Properties and HBS realtors are actively looking at redevelopment projects in the heart of the city to launch their newest projects.

“The premium land lies near the coast and most of these are filled with buildings that came up in the 40s, 50s, 60s and even the 80s. If you want to offer a good project with a good location to your customer, the opportunity is by redeveloping these sites, there is no other way.” says Sandeep Shah, managing director of HBS Realtors.

Exclusivity to Boost Luxury Housing Sales

With developers rushing to redevelop plots in prime areas, experts say the stock of ultra-luxury housing in the region is going to increase with projects selling in the range of Rs 12 crores to Rs 20 crores. That is strange considering that the luxury housing segment in the city has taken a massive hit over the past couple of years with demand practically non-existent. There have even been cases of developers converting sprawling luxury apartments into smaller configurations to spur sales. So what are these developers betting on? Experts believe these new luxury projects will be different from other projects thanks to the limited number of units on sale.

“Luxury projects have its own demand, which is very limited and depends upon the micro-market and how much supply of luxury housing stock there is. If a particular micro-market has only one redeveloped luxury project, I feel it will see a lot of demand because there is nothing else in that area to compete with it and it will be in a prime location. I expect builders to focus on small projects with 9 to 15 luxurious apartments which they should be able to easily sell for a premium.” says Sumit Jain, national director of residential services at Colliers International

That might explain why developers are ready to risk the redevelopment route to build their latest projects. After all, it is not an easy process with nearly 70% to 80% of redevelopment projects failing to take off. But if this model works out successfully, Mumbai’s skyline is definitely in for a dramatic change.

Reporter : Ashwini Priolker, NDTV
Web Editor : Nikhil Narayan Sivadas, NDTV