Rising Demand for Ultra-Luxury Homes in Mumbai

In the past eight months, Mumbai’s real estate market has witnessed a significant surge, with affluent buyers investing heavily in ultra-luxury properties. Sales of homes priced above ₹40 crores have accelerated, indicating a strong demand in the high-end segment. The market is not just seeing increased transactions; prices are also on the rise.

According to a report by Knight Frank India, the commercial real estate sector is experiencing notable growth as improvements in infrastructure attract both businesses and investors. Office space rentals, particularly in Nariman Point, have seen the steepest increase. Projections suggest that by 2030, rents in Nariman Point could soar from the current ₹569 per square foot to ₹1,091 per square foot, reflecting a robust demand for premium office spaces.

The Rich Are Spending More, But the Middle Class Struggles

Industry experts attribute this boom to a surge in redevelopment projects across the city. New developments are emerging in suburban areas like Borivali, Mira Road, Mulund, Ghatkopar, and Navi Mumbai, featuring luxury apartments alongside office spaces. However, this trend is squeezing middle-class families and small businesses, as rising prices make housing and office space increasingly unaffordable.

Mumbai continues to top the charts for high-value property sales, despite being the most expensive residential market in India. The financial capital attracts high-net-worth individuals (HNWIs) and ultra-HNWIs looking to invest in ultra-luxury homes for personal use or investment purposes. Notably, cities like Pune, Chennai, and Kolkata have not recorded any transactions in this high-value segment.

Ultra-Luxury Sales Statistics for 2024

In the first eight months of 2024, 25 ultra-luxury homes were sold across Mumbai, Hyderabad, Gurugram, and Bengaluru, with Mumbai accounting for 21 of these sales, totaling ₹2,200 crores. This represents 84% of all deals in this segment across the top cities. For comparison, at least two separate ultra-luxury home deals were made in Hyderabad’s Jubilee Hills, totaling ₹80 crores, while a single ultra-luxury property in Gurugram sold for ₹95 crores.

Anuj Puri, Chairman of Anarock Group, suggests that the remaining four months of 2024, coinciding with the festive season, may lead to even larger residential deals. He anticipates a new peak in this segment before the year concludes.

Increasing Office Space Rentals

Knight Frank’s report reveals that Nariman Point was once Mumbai’s leading commercial hub, with rents steadily increasing from ₹200 per square foot in 2003 to ₹550 in 2007. However, the global financial crisis of 2008 and rising demand for Bandra Kurla Complex (BKC) kept office space rents at ₹402 per square foot in 2012. By 2018, rents at Nariman Point had dropped further to ₹375 per square foot, significantly lower than BKC’s ₹833 and NCR’s ₹460 per square foot.

Growing Interest in Premium Office Spaces

Shishir Baijal, Chairman and Managing Director of Knight Frank India, notes that strategic infrastructure developments are revitalizing South Mumbai and enhancing the allure of premium office spaces. The rise in property prices is indicative of increasing interest in these spaces, as enhanced infrastructure and a strong residential market bolster Nariman Point’s status as a key commercial center.

Nariman Point Sees 52% Increase in Rental Rates

By the first half of 2024, rental rates in Nariman Point surged by 52%, reaching ₹569 per square foot, outpacing Bengaluru (₹353 per square foot) and NCR (₹429 per square foot), where rental rates have dropped by 4% and 7%, respectively. The anticipated infrastructure projects are pivotal in enhancing connectivity, as the MMRCL plans to auction 4.2 acres of prime land for significant developments that will further boost Nariman Point’s appeal.

Anticipated Price Increases Following Dharavi Redevelopment

Experts predict that prices may rise further due to the long-awaited Dharavi redevelopment project, for which the Adani Group has received approval to allocate 124 acres of land at the Deonar landfill site, one of Mumbai’s oldest dumping grounds. On October 10, the cabinet approved nearly 140 acres of land for the rehabilitation of Dharavi residents, which will have a significant impact on the Mumbai real estate market. This ambitious project is expected to drive prices upward, alongside other major developments.

Major Deals in South Mumbai Propel Real Estate Activity

A significant transaction has recently occurred in South Mumbai, involving the famous Rhythm House music store in Kala Ghoda. Media reports indicate that apparel retailer Bhane Retail has been selected as the preferred bidder. Owned by Anand Ahuja, who is married to actress Sonam Kapoor, Bhane Retail is a subsidiary of the apparel manufacturer Shahi Exports. The deal entails acquiring a 99.77% stake in Rhythm House Private Limited and an office space of 12,000 square feet in Kurla.

Real estate expert Mihir Shah emphasizes that such transactions energize the market, particularly in an area known for its fashion boutiques, galleries, and premium restaurants, indicating an upward trend in asset values.

As Mumbai’s real estate market continues to flourish, the dynamics of ultra-luxury sales and commercial rentals signal an exciting yet challenging landscape for all stakeholders involved.