India Property
EOTG 38: Key Trends in
Mumbai
What’s going on in the Mumbai property market
–Trend #1: To us, the price gaps between East and
West Mumbai (now narrowed to 10-20%) as well as
North and South (now narrowed to 100%) are bridging
(vs. historically sharp discounts). The recently opened
Purva Mukta Marg (14km Eastern Freeway – 15 minutes
drive from Chembur to CST/South Mumbai), along with
dispersion of office complexes to the north, should help
this trend further. Outer suburban prices remain buoyant
– Goregaon (Rs13k psf), Mulund (Rs11.5k psf), Dahisar
(Rs10k psf) and Thane (Rs9k psf).
Trend #2: We continue to hold our contrarian view of
supply drought in South Central Mumbai over the next
five years. This is already pushing up rentals in ready-tomove-
in apartments (3BHK are quoting at Rs130k pm to
Rs300k pm). Capital values should spike in the next two
years. The often-reported supply glut (15msf plus) is in
early stages of construction; it could take 5-7 years to
get completed (most are 60-80 storeys tall) and appears
to be 20-30% pre-sold (should get sold out in 4-5 years).
Trend #3: Take-up has been brisk for several new
launches over the last 6-9 months from reputed
developers, reasonably priced and well located. This is
underlined by the Phase II launches within 6-9 months of
Phase I at better prices – Crescent Bay (Parel), Blue
Moon (Worli), Emerals Isle (Powai) and Vasant Oasis
(Andheri). Panvel appears to be stagnant – IBREL’s
Green pre-launch of Phase II at Rs5000 psf.
What to do with the stocks: We believe that the
physical market is steady, macro backdrop is mixed, and
latent housing demand in India is significant. We like
reasonably valued stocks of companies that are
executing well on scaling up and have decent balance
sheets. They include Sobha, OBER, Prestige and
IBREL – especially after 25-35% correction. We remain
EW on DLF (earnings pain in F14, uncertain Aman
sales); GPL (subdued core earnings ex capitalized
interest cost) and JIL. OBER and GPL have upcoming
equity issuance in the next three months.
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EOTG 38: Key Trends in
Mumbai
What’s going on in the Mumbai property market
–Trend #1: To us, the price gaps between East and
West Mumbai (now narrowed to 10-20%) as well as
North and South (now narrowed to 100%) are bridging
(vs. historically sharp discounts). The recently opened
Purva Mukta Marg (14km Eastern Freeway – 15 minutes
drive from Chembur to CST/South Mumbai), along with
dispersion of office complexes to the north, should help
this trend further. Outer suburban prices remain buoyant
– Goregaon (Rs13k psf), Mulund (Rs11.5k psf), Dahisar
(Rs10k psf) and Thane (Rs9k psf).
Trend #2: We continue to hold our contrarian view of
supply drought in South Central Mumbai over the next
five years. This is already pushing up rentals in ready-tomove-
in apartments (3BHK are quoting at Rs130k pm to
Rs300k pm). Capital values should spike in the next two
years. The often-reported supply glut (15msf plus) is in
early stages of construction; it could take 5-7 years to
get completed (most are 60-80 storeys tall) and appears
to be 20-30% pre-sold (should get sold out in 4-5 years).
Trend #3: Take-up has been brisk for several new
launches over the last 6-9 months from reputed
developers, reasonably priced and well located. This is
underlined by the Phase II launches within 6-9 months of
Phase I at better prices – Crescent Bay (Parel), Blue
Moon (Worli), Emerals Isle (Powai) and Vasant Oasis
(Andheri). Panvel appears to be stagnant – IBREL’s
Green pre-launch of Phase II at Rs5000 psf.
What to do with the stocks: We believe that the
physical market is steady, macro backdrop is mixed, and
latent housing demand in India is significant. We like
reasonably valued stocks of companies that are
executing well on scaling up and have decent balance
sheets. They include Sobha, OBER, Prestige and
IBREL – especially after 25-35% correction. We remain
EW on DLF (earnings pain in F14, uncertain Aman
sales); GPL (subdued core earnings ex capitalized
interest cost) and JIL. OBER and GPL have upcoming
equity issuance in the next three months.
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