Will Mumbai builders succeed in doing what the planners of Navi Mumbai had first intended? – Moneycontrol.com

It is over half the size of its famous neighbour, to which it is connected by a short, 1.8-kilometre bridge. It is among the handful of planned cities in Independent India. Yet, it is also among India’s most ignored cities. Welcome to Navi Mumbai: the low-profile cousin of Mumbai.

The story behind the creation of Navi Mumbai is well-known: After Independence, India saw a surge in its population, and Bombay (now Mumbai) saw large-scale migration. Lawmakers and planners recognised that this was putting stress on the infrastructure of the commercial capital of India. A new city was needed to decongest Bombay and it was possible, just across the harbour.

That’s how, in the 1970s, 16,000 acres across 86 villages were acquired by the state government and the journey of Navi Mumbai began.

Today, while Navi Mumbai ranks high on several quality-of-life parameters, it is a pale shadow of what it was intended to be. Several critical developments that had the potential to make it a vibrant and self-sustaining city did not materialise.

Even Mumbai’s real-estate developers did not take it seriously for many reasons. For starters, Mumbai itself is a large real-estate market, so that is where they focused. Then, many parts of Navi Mumbai offer too-small plot sizes which are not an appetising opportunity for top builders who prefer dealing in large land parcels. There is also a third reason: Navi Mumbai is a sleepy market that has not promoted itself well.

Sure, there are a handful of projects like the one by Wadhwa at the pricey Palm Beach Road. The only belt in Navi Mumbai that has several branded developers fighting it out is the Panvel market – a micro-market on the outskirts where land parcels are large but realisations are lower. The lucrative pockets have smaller land parcels, and are dominated by names that are focused only on the Navi Mumbai market.

This is set to change. Unsurprisingly, the charge is being led by an aggressive Godrej Properties. They have at least two new projects lined up for execution in the medium-term. Raheja Universal has done a launch in the recent past. L&T is constructing an integrated township. A rising listed player is eyeing a sizeable deal. The timing is appropriate as the recent Unified Development Control and Promotion Regulations block several ‘leakages’ that are otherwise common in Navi Mumbai.

It is only the beginning. Mumbai real-estate developers have been given a fillip by the government through stamp duty cuts and Floor Space Index (FSI) cost reduction – but it is unlikely that it will be enough for them. Moreover, stock markets have shown a growing preference for developers who are adding projects at breakneck speed. Add to that, the infrastructure connectivity that is likely to finally see completion and has the potential to alter the dynamics of the entire Mumbai Metropolitan Region market.

Does that alter the competitiveness of the Navi Mumbai real estate market? There are two schools of thought. One says that the market is local in nature and thus large names may struggle. Take the case of Hiranandani Developers. There is a widespread perception that the privately held group is the most profitable real-estate company in India. Yet, its sole failure has been at Navi Mumbai, where it sold at a loss. On the other side is the claim that large names will bring in practices that will add to the credibility, and thus will provide a distinct edge. This side of the argument cites a project by infrastructure giant L&T, which even during the peak of COVID-19 last year saw a remarkable sales performance.

I am not sure of either of the extreme views. Generalisations are always wrong, but I suspect a majority of branded developers have the opportunity to shake out the lethargy from the Navi Mumbai market. Yet, it will be risky to believe that brands can command a hefty premium in this market. Keep in mind – Navi Mumbai is not Noida, where a severe trust deficit among local names allows credible players to get a premium.

Navi Mumbai has a capable set of developers who are able to meet the demands and expectations of the market. Devang Trivedi of Progressive Group, a Navi Mumbai developer, points out, “Navi Mumbai’s real estate industry has always focused on volumes with thin profit margin and quick turnaround time. On the other hand, Mumbai’s real estate industry has largely focused on a big profit margin. Developers in Mumbai will have to change their mindset to succeed here.”

Whichever way it turns out eventually, Navi Mumbai will yet be a gainer. Large developers will upgrade the profile of a market that desperately needs and deserves it. It will finally set in motion a critical component of a plan that had been envisaged almost half a century ago: of building a self-sustaining and vibrant city.