60 years of Indian real estate

Paradigm shift

The Indian real estate sector has grown exponentially in the last six decades, says Shilpa Sachdev


More than 60 years after India became a Republic, the country has seen phenomenal changes. It has gained recognition globally as a major player in the world economy. This is also reflected in the journey of the Indian real estate sector, which has emerged as one of the significant contributors to the country's GDP. 

The country has witnessed a tremendous housing boom, specifically in the last decade. Newer locations have come to the fore expanding the boundaries further. While the metropolitan cities continue to remain in demand, even Tier II and Tier III cities are fast gaining momentum on account of their commercial and strategic viability. On the policy level, liberalization indeed threw open the floodgates of the country's development. 

Surabhi Arora, MRICS, Associate Director - Research, Colliers International says, "The sector started flourishing with India embarking on broad-based liberalization in post 1990's era when various multinational corporates started seeking permission to commence operations in India. Mumbai, being the financial capital of India, was the first city to witness the influx of financial and services multinational companies. By 1997, the real estate prices increased to the point where the companies started looking for cheaper, cost-effective locations and Indian real estate witnessed emergence of new alternative/peripheral business districts in all the major cities in India."

Over the years, the landscape of Indian cities has undergone a great transformation. While the key cities have grown beyond their current potential and are expanding vertically, areas which were earlier categorised as peripheral cities have today become prime areas holding tremendous growth potential. A Kalpataru spokesperson says, "Areas like Thane, New Mumbai, Panvel around Mumbai and areas like Gurgoan, Noida around New Delhi have become centres of trade with excellent infrastructure support like state-of-the-art commercial, retail and integrated township projects offering world-class lifestyle amenities. Also, many other areas within the heart of the cities, which were earlier categorised as industrial or textile mills, have also been opened up for development which is also leading to high-end luxurious projects being launched in these areas."

The housing sector has attracted a lot of demand and appreciation in the last few decades. Highlighting a few important events, Anuj Puri, Chairman and Country Head, Jones Lang LaSalle India says, "The roots of the high appreciation rates on India's property market witnessed during the boom period lie in the reduction of interest rates that the NDA Government instituted after 2001. The very amenable borrowing rates encouraged individuals to avail of home loans to buy residences, where actual property purchase had only been an option for the considerably rich before that. This resulted in a huge demand for quality real estate all over the country post 2003. After March 2005, Indian real estate rates displayed a seemingly unstoppable upward curve."

The scrapping of the Urban Land Ceiling Act was the game-changer but it is yet to see its true implementation. According to Mayur Shah, CMD, Marathon Realty, the housing requirement in Mumbai was never an issue post independence. Smaller housing societies would come together and develop residential buildings until 1976 when the Urban Land Ceiling Act came into force. Shah shares, "I still remember when my dad constructed the first building in Mulund in the year 1972, rates were really reasonable. He was selling a flat at the rate of Rs 51 psf in Mulund. So there was never a housing problem but the introduction of the ULC Act strangled the real estate development in the city. Land got locked but urbanisation continued its pace leading to a massive housing shortage. As a result, the prices shot through the roof. This continued till the year 2008 when the ULC Act was scrapped. But then the backlog was too much to phase out. Today, we have a 1:20 ratio of shortfall where if 20 units are required, only one is built. Infrastructure is still a big challenge. What we need is clear, transparent, speedy and sustainable development."

With time, several changes have been introduced to fast track the sector's growth. Manju Yagnik, Vice-Chairperson, Nahar Group says, "Various reforms by the government such as repealing of Urban Land Ceiling Act, altering FSI rules were the key drivers for the real estate development along with the massive infrastructure development. One must also credit the change that was witnessed within the real estate sector. 


For instance, this sector, which was once dominated by old contractors, has welcomed the arrival of a new crop of developers, who have introduced a professional approach towards property development and international standards of construction. The country has witnessed revolutionary changes in the cities such as Mumbai, Bangalore, Hyderabad and Pune."

Newer technology and a competitive environment have led to the development of a host of new amenities, including township living where everything is available at the doorstep. This has brought a lifestyle shift indeed. Yagnik adds, "World-class health centers, schools, shopping malls, and amenities such as amphitheatres, clubhouses and gyms in the townships that were unheard of until some time ago are now being offered by developers. The competition within the sector has benefited property buyers as many developers today are actively engaging the services of international designers and architects for their projects."
While the sector has come a long way, there is still a room for reforms that will unlock the potential of the industry. 

Shailesh Puranik, MD, Puranik Builders says, "The country has seen a growth rate of 8-9% in the last decade with a 25-30% increase in urbanisation. Allied sectors like materials and infrastructure are also developing as a result. If the infrastructure sector can be given industry status why not real estate? This will facilitate cheaper credit to the industry. ECBs are allowed but they are restricted to a limit. Enough finance is still not available to the sector. The government needs to act as a catalyst and not an impediment. Single-window clearance is the need of the hour; timelines need to be reframed. With different municipal corporations getting established, Mumbai will become one big metropolis in the time to come. We need better clarity and defined policies to sustain the growth coming our way."

As the country's skyline continues to change and redefine itself, there are miles to go. Starting with an industry status for the sector, the clarion call demands for simplification of procedures and systems to infuse the much-needed transparency and boost consumer confidence. Better regulation, best international practices and a professional approach will pave the way forward.


published in Times Property on Feb 2, 2013

Thane Area Scan

Consistent growth

Genuine demand is driving the residential property market in Thane, says Shilpa Sachdev

Thane, also known as the city of lakes, has emerged as a preferred residential location in the recent years.  The city is flanked by the Sanjay Gandhi National Park and is surrounded by Yeoor and Parsik hills. Once an industrial hub, the city has completely changed in nature. Most industries have now turned into high rises. 

Pic courtesy: Hiranandani Constructions

Shveta Jain, Director – Residential Services, Cushman & Wakefield says, “Thane has witnessed phenomenal growth. The city has expanded towards Ghodbunder road which has seen a number of new launches in the recent past. With commercial office spaces also coming up in the city, growth prospects look good. The city is expected to grow in the coming years and is preferred by both investors and end-users alike.”

The social infrastructure has seen a great transformation in Thane. A number of renowned educational institutions, multi-specialty hospitals, malls and entertainment zones have come up in the city in the past few years and the number is expected to grow. Thane has a number of schools and colleges such as St John High school, Smt Sulochanadevi Singhania High school and many others. Lodha World School also has a center in Thane. Jupiter and Bethany both private multispecialty hospitals are present in Thane. There are five malls in Thane including the relatively new Korum mall, which further adds to the overall social infrastructure of the city.  In fact, Hiranandani Estate and Hiranandani Meadows have become two full-fledged township projects in Thane having their own school, hospital and shopping complexes. The commercial growth, especially from the IT sector, is also influencing the demand for residential property.

A Kalpataru spokesperson says, “Thane is emerging as one of the fastest developing districts with lots of malls and corporate companies establishing their business practices in the city. Global leaders in IT are vying for space in Thane to set up their offices and the trend is shifting of offices mainly in IT and ITes industry to Thane, thus giving rise to concept of ‘walk to work’ culture. The presence of Ghodbunder road, located at few meters from our residential projects, Kalpataru Hills and Siddhachal Elite, connects the city with central and western suburbs of Mumbai city. Wide roads, sprawling mega-housing projects, malls and multiplexes, healthcare centres, lakes and an enviable view of the Yeoor Hills have added to Thane’s USP, making it preferable destination for living.”

Infrastructure facilities have improved with the construction of SATIS (Station Area Traffic Improvement Scheme) and multiple flyovers being constructed over the Ghodbunder road. This has improved the quality of living in the city. Jain adds, “Thane is well connected to the eastern suburbs by the eastern express highway and to the western suburbs by Ghodbunder road. The city also has connectivity to Navi Mumbai by both trains and roads. With the huge growth in population, the Thane Municipal Corporation has taken steps to improve the overall infrastructure. Flyovers on Ghodbunder road will reduce the overall strain on vehicular movement.”

Prakash Shah, Director - Finance and Business Development, Hiranandani Constructions says, “Infrastructure in Thane is fantastic. The place has wide roads facilitating connectivity to the western suburbs in 20 minutes via the Ghodbunder road. The place has lots of greenery and many lakes to its credit. Three new flyovers are under construction which will connect the Ghodbunder road to the eastern expressway. The train connectivity to central line is in place that takes 45 minutes to reach VT station. Thane is one of the most affordable residential locations that makes it an ideal place to live and work. Also, a lot of commercial development is happening in the neighbouring areas like Airoli and Thane itself that is adding to its changing profile.

Ghodbunder road has grown into an important extension of Thane city as most new launches are coming up here. Om Ahuja, CEO - Residential Services, Jones Lang LaSalle India says, “Thane is well-developed, and represents a city in itself – a city with its own character and economic drivers, including large businesses that drive the demand for residential properties. The manufacturing sector, especially along Ghodbunder Road, plays a big role in keeping the residential property sector lively. Also, the accelerated activity in residential property development has caused an upsurge in malls and entertainment complexes, which further influence demand. Generally speaking, Thane is in the process of gaining equal desirability status with areas like Malad and Goregaon.”

With the growing real estate and infrastructure development in Thane, the city has something to offer to all the segments of the home buyer’s right from budget homes to mid-range homes to high end luxury homes. Shailesh Puranik, Managing Director, Puranik Builders Pvt. Ltd says, “The luxurious lifestyle, the connectivity, the infrastructure and its affordability are the various factors due to which home buyers across the spectrum have chosen Thane as their favoured residential destination. Our project Rumah Bali is strategically located at Ghodbunder road which is well connected to the Eastern Express Highway and the Western Express Highway. It is in close proximity with the schools, colleges, hospitals and shopping centers.”

Puranik adds, “Widening and construction of roads and flyovers has made Thane city more accessible, internally and externally. This kind of planned infrastructure will definitely support the increasing population and the growth of this city.”

Due to presence of various projects in different range, the property rates in this city, range between Rs 5000 to Rs 10,000 psf, depending on the location, quality of construction, size of the flat, & amenities provided. 

Thane offers a great living destination to the home seeker. A number of lakes, a growing number of malls, more and more new projects getting launched and a reasonable price bracket, has made Thane a very attractive residential location. 

A Kalpataru spokesperson says, “With limited scope for expansion of Mumbai city, its neighbouring cities like Thane are been favoured largely for accommodating the rising needs of home buyers. Also, the cost of living in Thane is relatively lower than the suburbs of Greater Mumbai.”

According to Ahuja, the long-term future for property in Thane is excellent. He says, “While this area remains among the more affordable ones around Mumbai, there will be a steady rise in rates as development catches up with the planning and existing supply is absorbed by buyers.”

The upcoming infrastructure around Thane such as additional airport at Navi Mumbai, extension of the Metro and mono rail network in the Thane city is likely to contribute to the appreciation of the property rates in the future. Puranik concludes, “We also see the new corridor of Thane-Navi Mumbai and Pune emerging out of the proposed infrastructure development. As a result, an investment made now in Thane is sure to give handsome returns to the investor in the next few years.”