Just when the soaring prices of mill lands and price attrition in commercial destinations such as Bangalore and Gurgaon made Mumbai's commercial property tempting, the rain gods willed otherwise.
After the floods, city realtors are keeping their fingers crossed about the direction of the property market, which had begun to look good with a large number of new players, properties and foreign investors coming in. Preliminary estimates put the loss of property at Rs 15,000 crore (Rs 150 billion) in Mumbai, western Maharashtra and Marathwada.
Although experts feel that it is too early to look for a trend, yet commercial real estate prices in south Mumbai are showing a downward trend.
According to the latest figures put out by real estate consultant Chesterton Meghraj, rentals in areas such as Nariman Point have slipped from Rs 150/ sq ft in April to Rs 130/ sq ft in July this year. While this may not be directly attributable to last month's deluge, industry watchers say that sentiment in the market has dampened.
"Infrastructure (clogged drains, narrow roads, broken power supply and telecommunications), relief chaos, overpopulation, crumbling drainage system or the (missing) disaster management plan of the BMC. Whatever may be the reason, the rains will surely have a sentimental impact on all the segments of the real estate sector in affected areas," said Anuj Puri of Chesterton Meghraj.
Industry sources say this does not mean that foreign investors will no longer consider Mumbai as a destination. "On the contrary, this only means that another set of questions regarding infrastructure get added to what you look for, "said another senior consultant.
On the positive side, the government has opened more land for private participation. Already it is considering giving 244 undeveloped plots reserved for gardens, gymkhanas, gyms, clubs, stadium, swimming pools, playgrounds and recreation grounds for maintenance through private participation. The city administration recently unveiled guidelines for private participation.
It is also reported to be considering granting transfer of development rights in compensation to owners of mangrove plots for not developing their land."For a while, overseas investors will be in no rush to invest in Mumbai. In flooded areas with poor infrastructure and high real estate prices, though demand may not get affected but capital values may not continue to witness the unprecedented increase," Puri added.