Niranjan Hiranandani, Co-Founder and Managing Director, Hiranandani Group, on real estate
Niranjan Hiranandani, Co-Founder and Managing Director, Hiranandani Group, on real estate
In this city, if there was ever a question of the centre of gravity, where the politicians, the chief minister, the governor, the high court, the banks, and financial institutions were located, it was only in south Mumbai. Anyone of substance either lived in south Mumbai or had an office here. Over the years, things changed. However, when it comes opinions on real estate, there is a lot of contradiction. I have been married to my wife for more than 45 years and yet, on real estate, she always has a differing opinion. I’ve still not been able to convince her that my opinion is the one that is correct. Anybody who’s bought a house, built a building, done an interior, run a society, has differing opinions on the same house, building, interior or society with anyone else. That’s how things are. As to where we should be, in terms of the future, things are changing rapidly.
The centre of gravity has started moving northwards. The Central Business District (CBD) which was Nariman Point has moved to Parel because further growth was not possible in south Mumbai with the sea on three sides. Then, CBD moved further north to BKC, then Andheri, Powai, and slowly to Navi Mumbai. Further changes are going to take place in the future.
Similarly, in terms of residential accommodation, Kalbadevi was the centre of gravity that everyone started with and that’s where Zaveri Bazaar and the cotton and other markets were, from before Independence. Later, we moved to Marine Drive, Malabar Hill, and Worli, and that was the end of everybody who was worthwhile talking about. That has again changed. We started having people who moved the centre of gravity to Bandra and then Juhu. Bollywood came up there. Further change took place when huge residential campuses were built including our own at Powai.
Powai was in nowhere land. When I first took it up, people said, “Oh, that’s where we go for picnics; we are not going to buy a house there.” Nevertheless, the reality was that it continues to grow. We have sold only 7500 residential apartments there, from studio apartments to six-bedroom to penthouses. Property prices there are higher than Parel; many of the buildings there are different.
What really changed was that the growth moved northwards. However, the infrastructure didn’t improve. When Parel came up, the roads did not get widened; the railway station had corridors that remained small. Let’s look at the changes that are taking place now, which will make a difference in the next few years.
All of you know what today is. If you are living in a house either owned by you or rented by you, you know all about real estate. The differences of opinion about everyone is so much that even my lower floor apartments get sold, the upper floor apartments get sold, the garden-facing apartment gets sold, the road facing apartments get sold, because different people like different things. And thank God for that. Because otherwise, only one side of my building would get sold. So, it’s nice to see the difference.
But let’s see the major changes accruing today. Mumbai has 190 kms of suburban rail: the Western Railway, Central Railway, and Harbour Line are about 190 kilometres. It has been so for 65 years. In the next two years, or maximum three years, we are going to add 330 kms of Metro which means if you get into a Metro here, you’ll be at the airport in 30 minutes. And you can be sure that even with the worst of monsoon and traffic, you will be able to catch your flights etc.
The second major change is the Mumbai Trans Harbour Link (MTHL), the longest sea bridge in India at 22 kms. Mumbai will not be an island anymore because the connection from north and south parts are already done so, in fact, it gets connected. Mumbai was originally seven islands when the bridges got connected, that’s why it became one city and one suburb. Now, with the bridge connecting to the mainland, you can forget that Mumbai is an island because both sides are going to be connected to the mainland.
But the interesting part is the future of real estate. You can reach Panvel from south Mumbai once the connection is done. Also, the connector to the freeway, which is a new underground tunnel that is coming up, will connect Marine Drive to the freeway. Unfortunately, they forgot to start that while they were building the bridge. But it’s happening now. So, the two connectors, one is Worli to the freeway and the other, which is going to be underground to Marine Drive, is just being tendered out.
The third one is the elevated highway from Chirle which will go right up to the starting of the freeway to Pune. All in all, you’re going to open up new vistas for development and real estate and the centre of gravity will see a new change in the next couple of years.
To give you an idea of the quantum of land available across the harbour, if you cross the MTHL and come to Navi Mumbai, Panvel and further, we have vacant land equivalent to half the land of Mumbai. I’ll repeat, I know it sounds difficult. It’s difficult for me also, in spite of being in the real estate business.
Once you cross the MTHL and you land up in Navi Mumbai, and then you go on up to Panvel and then to Karjat, you have enough land which will be equivalent to half the land of Mumbai empty. So that’s where the next development is likely to take place.
In order to understand how that is happening, two important things are happening there. One is the Navi Mumbai Adani airport which is expected to be operational in 2025. There is also an extension of the suburban railway line which goes from VT to Panvel; this will go up to Karjat so you will get suburban railway line also opening that segment and, of course, the Mumbai Pune corridor which means it’s faster to reach Alibaug and faster to reach Khandala, Lonavala. All of you who have bungalows and houses there will reach in half an hour 40 minutes’ shorter time because you’re going to get this new connectivity. And, of course, how can I forget the western side where the Coastal Road is going to connect from Marine Drive – and they’re likely to extend it up to Nariman Point – not only go up to Bandra but it’ll move to Versova to Kandivali and then ultimately right up to the Dahisar. So that connectivity is there, though the other ones have not yet started and there is a discussion on that.
There’s going to be more change in the real estate business in the next five years than those that have taken place in the last 45 years. The new paradigm is going to be something we can look forward to because you’re going to get fresh areas, new areas of development, new ideas, new thoughts, new investments, new opportunities. Like Powai seemed to be a very far away land but now it’s a reality.
Similarly, you’re going to see not one, but 10 projects like that across the harbour. There are other corridors coming up also. However, a couple of other things are also happening in the next few years. Number one, redevelopment in Mumbai. I’m sure all of you are affected. Anybody not affected, please put your hand up. Everybody is going in for redevelopment of their projects. And this is something which the government has done because of the old buildings.
Mumbai city is an old city. There are buildings that are 30 to 90 years old and they require redevelopment. Since there’s an opportunity for the purposes of FSI, advantage comes to you as an occupant, society, tenant, or slum. Any one of the three redevelopment is permitted. CRZ restrictions have been mitigated so you can now cross the line even if you are within the 500 metres of coastal build and you can go ahead for the redevelopment.
All this means we also have an opportunity to redevelop in the city. But there’s a handicap. One is that they are not widening roads. If you have an FSI of 1 or 1.3, and now you’re going to use 3 FSI or 4 FSI, depending on the type of project that you have, the number of cars and vehicles will have increased disproportionately. So, Mumbai is going to see far greater congestion in terms of vehicular traffic and other things, and other infrastructure in terms of whatever we have to do. Fortunately, a lot of hospitals have come up. There are good schools in these areas, even in the suburbs, a lot of new operations have happened.
So, a couple of changes in the future: Number onewe’re going to move northwards. We’re going to go across the harbour, and this is definitely going to be a manifold change that will take place.
Two, redevelopment is definitely taking place.
The third, which you saw, large areas were given to Adani for the purpose of Dharavi redevelopment, which is something that was needed. A large number of other redevelopment slum schemes will also come. So, Mumbai, which was actually stagnant in terms of moving and operation, we have done it.
The challenges are many in terms of infrastructure, and we are all worried about it, because the congestion is not going to be reduced. Luckily metro lines in many suburbs have helped prevent congestion, but in the city, we are still going to be challenged because we don’t have metro lines everywhere.
There’s one question I’ve been asked several times by people, especially in interviews, one which went viral, where I had one and a half million hits.
I was quite shocked, and I got 32,000 people writing to me about it. The question which I was surprised about was: “Should we buy or rent a house?” Young people now want to rent houses instead of buying them. They say: the returns of the house are not as much. I say, nothing doing; in India with social security not being there, you should buy one house. Inflation is under control today but tomorrow it may not be, and you won’t be able to afford the rental of the house you want or are used to. So, I recommended this again and again because you have the benefit of getting the lowest rate of interest on a home loan, plus a tax deduction for the purpose, and creating a capital asset. Of course, the capital markets are good. The stock market is good for those who understand the stock market is wonderful. But a house becomes a necessary ingredient which I’ve been talking about. I got a million plus hits to understand this, and I was myself shocked.
So, I’ve just given you an idea of what yesterday was, how real estate has gotten dignified. Now, you have many corporates willing to come into real estate, like a Godrej or a Tata. It was not so in the days when I started my real estate business. The difference is also that home loan interest rates have been the lowest as compared to whatever they were, though they have increased from six-and-a-half to eight-and-a-half. They are still lower than what would be available to a businessman. A businessman would get it at least two to three percent higher than a person who is taking it for a home.
There is a joke about it. An industrialist went to the State Bank of India for a loan of Rs 500 crores. The bank was very happy to give it. They gave it to him at 12-and-a-half percent interest and the industrialist was very happy with it. His peon went to State Bank of India to take a loan and he got it at 7.5%. So you know who’s richer, I don’t know, the man who buys a house is always richer. So, if you can secure your house, you’re going to be much happier in terms of whatever you have done and that’s my view today kal, aaj, aur kal bhi. Thank you so much.