Mumbai’s Biggest Mall fails, converted to office

Falling footfalls in Bhandup’s Magnet Mall, one of Mumbai’s greatest, has constrained its engineer to close down and redo the 10 lakh sq ft premises into an office-cum-retail intricate.

In the course of recent years, a few shopping centers the nation over, including Mumbai, have been changed over into business or residential real estate in Mumbai as a result of poor business. Be that as it may, advertise sources said Magnet is the biggest in the nation so far to go up against an alternate symbol.

The shopping center business is viewed as indeterminate in light of high incubation and high investment. Just a couple has succeeded. Experts in Property in Mumbai showcase sources said upwards of 11 shopping centers close down in the nation in the vicinity of 2010 and 2015.

Magnet Mall, situated on the bustling L B S Marg in Bhandup, is controlled by Mumbai-based engineer Neptune Group. It began operations in 2012. Footfalls dropped by half in Magnet Mall, which began in 2012, on account of web based shopping and further declined after Easy Day an expansive hyper advertise involving 60,000 sq ft on the premises, shut. “Retailers were draining a direct result of e-commerce business, so we took a cognizant choice to update the whole space for workplaces and some retail,” said Neptune Group CMD Nayan Bheda.luxury flats in mumbai

The designer, who will pump in Rs 100 crore to revamp the premises after it was closed down a year ago, said a large portion of the territory will be presently cut into little workplaces and sold. The rest of the space will be sold to customers searching for bigger workplaces while a segment will be held for retail. “We have arranged little boutique workplaces,” said Bheda, who will dispatch the new venture not long from now.

In 2009, D B Realty racked its arrangement to building the nation’s biggest shopping center in Dahisar (2.5 million sq ft) and changed over it into a private venture.

Two years prior, Nirmal Mall in Mulund, which is near the Magnet Mall, additionally for all intents and purposes close down after engineer Nirmal Lifestyle said it wound up plainly unviable to run it as a result of rentals and upkeep charges. The land will be used for a private venture.

Kandivli’s Raghuleela Mall, Bhandup’s Dreams Mall, Santa Cruz’s Milan Mall, Vashi’s Center One and Atria Mall at Worli area portion of the retail buildings which neglected to take off.

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A senior real estate consultant shared these points this us-

  • A modest bunch of good shopping centers keep on performing to a great degree well the nation over, however many normal and low quality shopping centers have wallowed
  • One of the reports said that without precedent for India’s shopping center history, a net negative supply of retail space was seen in 2016 because of conclusion of a few shopping centers combined with constrained new supply. “While five shopping centers close a year ago, 10 others changed their utilization to workplaces, instructive establishments, shopping groups, healing facilities and dinner corridors, bringing about 3.5 million sq ft of retail space (crosswise over 15 shopping centers crosswise over India) getting pulled back from the operational stock
  • A year ago, the aggregate net retention of retail space in India was 2.7 million sq ft with Delhi-NCR retaining around 1 million sq ft, trailed by Mumbai at 6 lakh sq ft and Bengaluru at 4 lakh sq ft. “While 13 shopping centers were finished in 2016, 15 shopping centers were pulled back from the operational stock.

This new update from the commercial property in Mumbai will probably have a mixed reaction and one will have to wait to see the results.

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Real Estate in Mumbai going through a Market Correction & Why Worst is Yet to Come.

In terms of real estate Mumbai is the costliest city in India and is ranked 12th in the World. Over the past few years there has been noise in the real estate market in India that property prices have gone over the roof in certain cities and the market needs price correction; and in the last 2 years it has happened so.

 

One method which is used for valuation of property all across the world is the rental yield. Rental yield in USA ranges between 7.5 to 9.8% which is very healthy. In India Bangalore has the highest rental yield of 4.0%, whereas Mumbai is much lower at 2.4%, much lower than the normal average rate. This implies that property in India cities like Mumbai is overvalued. Though, one argument which is given against this analogy is that India is a growing market; where there is surplus real estate inventory; the end user has choice between taking rental accommodation or buying a property; he prefers to buy a property, as interest rates are low and in the rental costs one is able to clear the EMI; thus the rental yields automatically are lower.

 

The fact is that real estate prices in cities like Mumbai increased exorbitantly from 2008 to 2012, defying all economic logic; further though the property rates increased, the rentals did not increase in accordance with the price hike, thus further defying the valuation model. Property rates in localities like Malabar Hill are beyond a lakh of rupees per square feet, which is mind boggling; On the other hand the per capita income did not increase commensurately; in simple economic terms this created a huge gap between the cost v/s purchasing power of an end user; the property prices were finally out of the reach of a common man; forcing the real estate, market in cities like Mumbai to set-in corrections.

 

Market corrections take place in all domains and sectors. However, real estate has its nuances; it is a slow moving, inventory based market and any reversal takes time, that also in years. Mumbai real estate is a peculiar case in itself; as smaller developers sensed an opportunity they shifted focus towards satellite towns of Navi Mumbai and Thane, which could offer reasonable alternatives in terms of affordability. Over the past couple of years, Navi Mumbai and Thane have become cost effective alternatives for the real estate crisis of Mumbai.

 

This has further increased the problems of real estate property in Mumbai; with end user market shifting to affordable towns of Navi Mumbai and Thane, there are no buyers for the existing surplus inventory, as also which is under development in Mumbai.  Mumbai real estate sector would have to seek divine help to bail it out of this crisis. One thing is for sure that by the time dust settles down after the revival cycle is over, Mumbai real estate would be the biggest looser.

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Real Estate in mumbai – get the Facts Right

Real estate in Mumbai is probably going through its darkest phase. The word has been in around since the beginning of 2015 that the ‘year of recovery has arrived’. However, nothing much has changed; in fact, the property prices in Mumbai have been overall dented by 15 to 20%. This does not mean that the rates have physically gone down by that much, but it implies that taking into consideration all the factors like inflation, growth rate, incentive schemes etc. the property prices have not gone up and nor has the market sentiment turned positive. 2016 has been no better and the slow-down has continued in the residential real estate in Mumbai.

Residential real estate in Mumbai today is almost sitting on 1 lakh unsold inventory which would take anywhere between 2 to 3 years to liquidate. Out of this only 5% inventory is ready for possession balance is either under construction or is a part of stalled projects. These are alarming figures by any standards. Further, out of this 1 lakh inventory 75% is priced over one crore and therefore is not in the affordable segment. These two aspects are the most counterproductive for the Real estate in Mumbai.

The real estate builders in Mumbai are awaiting a miracle to happen, with their hands tied to the back. Though the cost of cement, steel and transportation has come down, the labour and land costs have gone up; thus leaving no scope for the builders to bring down the costs any further. The individual investor remains confused and is willing to play the ‘wait and watch game’ as nobody is able to predict the market turnaround. Mumbai real estate market was or is heavily dependent on foreign investments in terms of NRI investors. This market sentiment has been shattered with the present slow-down, it may take quite some time to recover and would in all probability follow recovery by the domestic market.

This has very serious implications for the real estate in Mumbai; it implies that the market would only go through a ‘timed correction’ i.e. to say that as years go by, the per-capita income increases, the individual investor would have more capital; will be able to pick up more loan amount and therefore would be able to invest in real estate at the prevailing rates, probably after 1 to 2 years. The real estate prices in Mumbai may not undergo any further correction; however, they may not enjoy any further growth as well, in the next couple of years.

Mumbai for one is the financial capital of India -the ‘King City’ and has the mojo to fight back and recover. The turnaround may take some time, but is bound to happen. Real estate developers in Mumbai just need to keep patience and faith.1