Lodha Developers bagged a 6-acre plot in Wadala, Central Mumbai, for a cumulative price of Rs40.5bn. The plot has a developable area of 495,000sqm or 5.3msf. With total estimated saleable area of ~7.6msf (70% residential), we estimate the project’s NAV at Rs31.3bn and has the potential to add over Rs100bn of housing stock in Central Mumbai over FY11-16. We believe this project would result in an oversupply in the premium segment in Mumbai. We reiterate our view of a 10-20% price correction across projects in Mumbai.
The acquisition at Wadala has the potential to add additional 2,500-5,000 units over the next 4-5 years in the premium/super-premium segment representing potential sales value of over Rs100bn. In such a scenario, we believe that prices in South/Central Mumbai would be under pressure and there is a possibility of 10-20% price correction in Mumbai on the back of this oversupply. What say ?
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