An Expanding city- October 21, 2006. Times Property (Times of India)

With prices in south Mumbai galloping, buyers are increasingly looking to other locations in the city and even to destinations like Pune

Last week we ran a search in the market for a four-bedroom apartment in the south Mumbai region (Worli to Colaba). Specs were 2500 to 3000 sq. ft. as size requirement in a budget of Rs 8 to 10 crore in an A grade building. The outcome of the search was: zero properties existed in that range.

Each seller has somehow got into his/her head the effect of a few isolated deals in Rs 45,000 a sq.ft and upwards; for obvious reasons they have created a benchmark and have pegged their properties for sale with similar expectations. I have said this before - expectation is not necessarily reality. Such a turn of events is leading to stagnation. There have been practically no deals worth mentioning in the ownership segment in South Mumbai due to such high demands.

All this had led to buyers reconciling to looking at other locations. With the recent MCHI exhibition having displayed new developments across the city, the buyer today has a much wider choice. I know of people who have even opted to look at Pune because they are unable to digest the numbers here.

Last weekend I was in Pune for a large commercial property dealing in the IT/Tech segment. I was nearly in disbelief at the quality of construction and professionalism shown by most developers in handling our requirement. The city has a lot to offer in terms of value for money in comparison to Mumbai.

A lot of young couples have decided to make that move. With each II and III tier city getting urbanised, in time there won't be much difference in terms of living standards and environment. Somehow pricing automatically determines your destination/location. Within Pune the low-end price range would be Rs 1,600 a sq. ft. and high end would be Rs 7,500 across the city, whereas in Mumbai the low end - for example, Mira Road - as a location is at approximately Rs 1,800 and high end at Malabar Hill at approximately Rs 35,000 to 40,000 per sq.ft. The difference is enormous.

If anyone today wants to look at buying a home in the upmarket segment of Mumbai they would have to look at spending upwards of a crore for a basic two-bedroom in the south Mumbai region and approximate minimum of Rs 40 to 60 lakh in the suburbs. With such price points, moving to other destinations like eastern and central suburbs, Navi Mumbai, Kharghar upto Panvel is a wise option.

The city is going to be expanding and that is healthy growth sign. These are the locations to look out for. With huge development of mixed kind, factories, IT, offices, Retail etc. the boom for this location seems easy to predict. Even if additional supply gets added into other locations through mills or any other source the corresponding price will still be high. For example, Parel, with so much supply coming in the speculation that prices would fall or stabilise - no such thing seems to be happening or will happen. The high acquisition cost plus holding and construction cost will be passed down to the buyer and that applies to all locations.