We visited the Maharashtra Chamber of Housing Industry (MCHI) Suburban Property Exhibition held at Bhayandar over January 26-29, 2012 to understand the housing market in the distant suburban areas along the western express highway. The focus of the exhibition was on properties located at Mira Road, Bhayandar, Vasai, Nallasopara and Virar. We saw that
Focus on low budget customers
- There was a strong showcase of 1 & 1.5 BHK flats across projects targeting low budget customers. Likewise, the demand for these low budget flats was strong,
- Overpricing was seen across all projects irrespective of project size. However, we do not expect prices to correct in these places owing to strong demand and good connectivity with western Mumbai,
- Prices in adjacent Borivali and Kandivali areas are ~35-50% higher than at Mira Road. With an improvement in infrastructure in and around Mira Road, prices here will see strong appreciation,
- Big developers gave the exhibition a miss.
There was a strong showcase of 1 & 1.5BHK flats across projects targeting low budget customers. Under construction 1BHK flats were available at ~Rs350-400mn (all inclusive) in Mira Road area. Likewise, there was a strong demand for these small units with most units getting sold off quickly. Also, most of the buyers were predominantly end consumers.
Prices remain on the higher side
Under construction flats in the Mira road area were quoting in the range of ~Rs4,700-5,200psf while those in Virar were at ~Rs4500-4,800psf. Although the rates here are much lower than in western Mumbai, we believe that the prices here are still expensive given their current infrastructure and distance from central Mumbai. However, we do not expect prices to correct here given the huge demand for projects in these areas. We believe that the high demand in areas of Mira Road and Bhayandar is mainly due to the expensive housing prices in the western belt (Andheri-Borivali).
Infrastructure will be a key
Although residential development in Mira Road and Bhayandar is in full swing, infrastructure development in these areas will need to catch up. Prices in adjacent Borivali and Kandivali areas are 35-50% higher than at Mira Road. With an improvement in infrastructure in and around Mira Road, prices here will see strong appreciation in the long run.
We expect prices in Mira road-Bhayandar area to remain firm. Prices in this area did not correct during 2009-11 when rest of Mumbai area saw a marginal price correction. Also, with offices now shifting from south Mumbai to BKC, this area has now attracted low budget customers due to its proximity to the western express highway. We believe that with improvement in infrastructure, the Mira road-Bhayandar area will show a good price appreciation in the long run.