Demand in Mumbai for Mid Priced Properties - Sarang Wadhawan

HDIL is one of the main Developers in the Island City of Mumbai. HDIL's promoter Sarang Wadhawan in an interview has the following views of the City's changing landscape.

Outlook on residential prices and volumes in the island city of Mumbai and in the suburbs of Mumbai?
Across Mumbai prices have gone up substantially in last 12 months. In most cases it has reached peak of 2007, while in some it has gone beyond 2007 levels. But the important differentiating factor has been that in last 1-1.5 years developers have been concentrating on launching affordable-mid income residential product catering to larger population. While in the earlier cycle most were concentrating on commercial and high end residential. So projects targeted at middle class and priced between Rs2500-Rs8000/sq ft in the suburbs continue to do well. If products are priced correctly, then demand is not an issue in suburb in Mumbai.

Which product types (residential- mass/ luxury, commercial and retail) are likely to see the most action in the next 12 months and the next 3-5 years?
In Mumbai before the crisis, the developers were largely concentrating on commercial, the revival of market happened through residential. We plan to focus on residential in Mumbai for next 12 -18 months. We will continue our focus on affordable/ mass housing where there is huge demand and continue to sell in volumes. There will be some luxury projects also but majority will be governed by affordable mid income housing. If real estate market starts improving further from here, over 3-5 years, developers will start shifting focus back on retail/ commercial. But for next 2-3 years Commercial will take a back seat as current supply is enough for 2-3 years.

On Airport slum rehab project
The construction work is on at 3 locations in Phase I. The work started at these locations between Apr 08-Oct 08 and in last 18-20 months almost 12mn sq ft of construction work has been done at these sites including various amenities like hospitals, primary schools, sewage treatment plants, police station etc. We were targeting movement of people to these sites from April 10, but BMC had asked us to delay the movement due to shortage of water. BMC will review the water situation in July 10. We are hopeful that due to good monsoon, we will get BMC approval in July so that people can be shifted from August/September.

What are current trends on TDR prices and volumes in Mumbai?
The TDRs are not linked to movement of the families but to construction of the rehab units. Currently TDR prices are above Rs3000/sq ft. We expect the prices to remain above Rs 3000 / sq ft in near future. We are targeting volume of 5-6mn sq ft in FY11.

Various Projects of HDIL:
We have 63mn sq ft under construction including the Airport project. ON the floor construction would comprise of ~30mn sq ft. Of this, residential would be around 8mn sq ft (75% of this is pre sold in range of Rs2500-8000/sq ft) and commercial 4mn sq ft( 20% pre leased). Remaining 18mn sq ft is slum rehab projects including Airport project.