Mumbai's commercial realty readies for major change

India’s commercial realty is in the throes of change. Smaller cities are now giving established metros like Delhi, Mumbai, Bengaluru and Chennai a run for their money by luring corporates with several benefits like better business potential, lower costs, scalability, talent pool and ease of doing business.

Not surprisingly many companies are now opting to open new units or shift their base to many of these ‘smaller’ cities thereby creating a huge demand for quality commercial space. An increased demand for office space implies the creation of more employment opportunities which invariably leads to a fillip in the demand for residential units.

Realty tends also indicate that established CBD’s in top Indian cities are now losing out to newly developed peripheral business districts located on the outskirts of major cities. While lower costs and in some cases better infrastructure facilities have played a major role in fanning this trend, urban planning experts offer a different explanation for this phenomenon.

According to them, this trend is indicative of the changing dynamics brought about by increased urbanization across India’s top eight cities over the last decade.  Citing data compiled by the UN, they point out that India’s urban population which currently stands at an estimated 40 crore is expected to touch a whopping 60 crore in less than two decades.

This, they add is likely to increase the strain on the existing infrastructure capabilities of these cities which are already on the brink of collapse. To mitigate this huge risk it’s important that new urban centers are allowed to be developed if only to reduce the tremendous pressure on existing cities.

However some cities like Mumbai clearly have an edge when it comes to their natural capability to allow scalability. A case in point is the rapid emergence of BKC that has strongly emerged as the city’s preferred CBD in the last decade overthrowing traditional business districts like Nariman Point.

So does this imply that location preferences have changed in recent years? While this seems to be case with Mumbai, there are several factors that decide the suitability of a city for commercial investments.

These may range from the availability of a large English-speaking talent pool (like in the case of cities like Pune and Bengaluru) to the existing regulatory environment and business-friendly policies adopted by the state government.

Coming back to Mumbai, the financial capital of the country, its amply clear now that the city has progressed from a single CBD in Nariman Point to several viable commercial alternates today like BKC, Powai, Goregaon and Lower Parel. This in turn has allowed companies the luxury of choice when it comes to choosing the right location as per their customized requirements.

The changing preferences for commercial locations in cities like Mumbai are suggestive of a major shift with regard to the housing demand in such cities as well. And the locations which are expected to benefit the most are the ones closest to such commercial hubs with the best social infrastructure and connectivity options that are conducive to the needs of employees working there and their families. Clearly Mumbai’s commercial realty sector is poised for some interesting time ahead.