This document provides an overview and update on the luxury residential real estate market in Mumbai, India in 2011. It discusses the high price growth in Mumbai's luxury market and identifies South Mumbai and Central Mumbai as the two main luxury micro-markets. South Mumbai continues to see strong demand and prices over $1 million USD, while Central Mumbai faces an oversupply issue with 40% of new luxury units unsold and potential for a 10-15% price correction. Specific luxury residential developments in both areas like Lodha's World One and Indiabulls Sky projects are also summarized. The emerging luxury residential market in Mumbai's western suburbs is also briefly outlined.

1. 5/1/2011
Master Sun Consulting , Mumbai
MASTER
SUN
MUMBAI LUXURY RESIDENTIAL
DEVELOPMENT- 2011 UPDATE

2. Mumbai luxury real estate is one of the costliest in the world also one
of the fastest in terms of price growth. While luxury real estate prices
remained stagnant in the most parts of the world, in Mumbai prices
increased by over 20% in 2010. According to Global Wealth Report by
Knight Frank and Citi Bank, Asian cities such as Shanghai and Mumbai
will start to close the gap in next 10 years with New York and London
that are presently on top of the wealth report’s global cities
index. Mumbai was also ranked the world’s 25th most expensive city in
terms of property prices while Monaco remains the world’s costliest
city followed by London.
And this trend is only bound to continue with aggressive real estate
appetite demonstrated by Indian HNIs. According to the report Indian
HNIs would like to invest at least 10% of their total portfolio in
residential real estate. This was double than what financial advisers
would have done. Real estate, as an asset class, however has rarely
disappointed in a city like Mumbai where stories of five baggers in five
years not very uncommon.The luxury apartment in a city like Mumbai
may cost anywhere between USD 1 million to USD 12 million, and range
from 5,000 square feet to 13,000 square feet in size. The luxury real
estate euphoria is fuelled by bullishness in some real estate pockets in
South Mumbai where luxury apartments in have become 25% to 30%
costlier than they were a year ago.

3. However it has been a mixed bag in 2011, where the glut of
apartments in Central Mumbai can play a spoil sport and one may see
some correction in prices. According to broker estimates around 40%
of luxury apartments coming up in Mumbai are unsold. Buyers in
markets like Central Mumbai are not buying into high rates of INR
25,000 per square feet. And as a result, pre-sales (wherein residential
apartments are typically sold before fully constructed) have come
down. This has resulted in construction delays since Indian developers
want to ensure that they don't have a large number of unsold units in
their ready buildings.
Mumbai’s Luxury Residential Micro Market- South Mumbai
Mumbai has basically two luxury micro markets- South Mumbai &
Central Mumbai. The South Mumbai market consisting of areas like
Malabar Hill, Cumbala Hill, Napean Sea Road etc. is an evergreen
market with severe paucity of land and an insatiable appetite for
luxury development. Price points of INR 50,000 per sqft are fairly
common in this market. Buyers usually are Indian HNI businessmen
(upgrading from old constructions to new fully loaded, feature rich
towers), NRIs and well-heeled professionals. They usually take very
small bank loans (often for tax efficiency) and are not affected by
interest rates firming up etc.

4. Trump Tower, Hughes Road:Donald Trump plans to bring his signature
of luxury homes to Mumbaion Hughes Road in south Mumbai. The
Trump Towers are being developed along with Mumbai-based
developer Rohan Lifescapes. The 60 storey Tower will have 5,000
square feet apartments overlooking the Arabian Sea.The tower will
have around 45 apartments and the lifestyle amenities will include a
luxury spa, gymnasium and a mini-theatre. It will be interesting to see
whether the design or the development will have anything unique or
whether it will be a just a case of Mr. Trump charging a hefty royalty
fee for his brand. According to market sources given the small amount
of flats and the novelty associated with the Trump brand name, the
development may fetch a 20-25% premium vis-a-vis neighbourhood
developments in South Mumbai.
Mukesh Ambani’s Billion Dollar Home: South Mumbai also has the
privilege of housing India’s richest man, Mr. Mukesh Ambani, tipped to
be the world’s richest man in a few years. Mr. Ambani has built the
world's most expensive house in Mumbai estimated to be above a
billion dollars. The house named Antilia, after a mythical island,
resembles a condo tower or a set of Lego building blocks from the
outside. But from the inside it is grand consisting of around 37,000 sq
metres of space, more than the Palace of Versailles. The billion dollar
tower soaring over 550 feet has three helipads, a health club, dance
studio, fifty seat movie theatre andunderground parking for over
hundred and fifty cars. The home is rumoured to have a wait staff of
600.

5. Mumbai’s Luxury Residential Micro Market: Central Mumbai
The Central Mumbai luxury market consisting of Lower Parel,
Mahalaxmi, Worli and Elphinstone is facing a glut of luxury
development with a supply of 10 million square feet of high-end
residential spaces coming in 2-3 years. It is difficult to go a kilometre
around this area and not see a new construction coming in. This belt is
set to see 7-8,000 houses in 2-3 years. With the projects quoting
anywhere between Rs 18,000 and Rs 26,000 per square feet it is
difficult to see how this supply will be absorbed at these rates.
There are two segments of developers here. One set of developers, say
Class A, have low inventory and/or are in a JV with the land owner
(who acquired land at a nominal rate years ago) willing to hold on till
the market recovers. The other set of developers, say Class B, are
willing to negotiate since they have a large inventory coming in and
have brought land at reasonably higher rates. As a consequence the
price quoted by two neighbouring projects could have a noticeable
variation.
The Class A developer prefer slowing down the project instead of
reducing prices. The cost of land for these developers is low and the
selling price for the apartment may be 5-10 times the cost of
land.These developers bought land in cotton and textile mills at INR

6. 3,000-5,000 per square foot around a decade back. They recover their
land cost selling a small percentage of the apartments. They can
thereafter afford to wait to sell most of the inventory at high prices.
This will obviously cause a lot of delay in construction of these
projects.
The Class B developers who has a large inventory of properties is
feeling the crunch due to high interest rates (affecting buyers as
well) and cautious financing by banks. These developers will be the
first one to cut prices and price cut of 10% to 15% may be in order.
The price correction may also be disguised by offering freebies like
free parking and a waiver of stamp duty.
Central Mumbai is however also witnessing some exciting super luxury
developments some of which are Lodha’s World One & Indiabull’s Sky
developments.
Lodha’s World One:Lodha’s 450 metres, 117-storey World One tower
is scheduled to come up by 2014 on the erstwhile Srinivas Mills in
Lower Parel. World One is tipped to be taller than the Empire State
Building in New York andscheduled to beat the record for tallest
residential tower which is currently held by the 323-meter residential
complex in Australia called "Q1.
World One will be a super luxury development consisting of about 300
units incorporating principles of sustainable and green living by
recycling its water, harvesting rain water and using solar power. The
building is targeting an Indian HNI who prefers a lot of outdoor space in

7. apartments unlike insides of the apartments in New York, Hong Kong or
London. Indian families don't want to be shut inand need an access to
outside air so each apartment has a balcony. The foreigner or an expat
in India will detest that on account of pollution & dust.
The height and the unique curved form of the building will allow a 360
degree panoramic view of the city including the Bandra Worli Sea Link,
the Race Course and the Arabian Sea. The height will also cut down
noise, pollution and heat.The flats on the higher floors will have 4.5
centigrade degrees lower temperatures than the ground floor. Lodha
has already pre-sold some of these flats to its old customers at a 30%
premium to neighbourhood development at INR25,000 per square feet.
Indiabulls Sky Project: Indiabulls Sky project, a high-end offering
from Indiabulls Real Estate will be hopefully delivered by 2013. The
Sky project is made up of three towers - Sky, Sky Suite and Sky
Forest.The project has choice of villa-like presidential apartments,
duplexes and penthouses. The living spaces target the rich to the super
rich with spaces from 2,600 square feet to 13,500 square feet.
Apart from the lavish spa and the massage parlour, the building comes
with its own housekeepers and personal butlers. It boasts of spacious
reading rooms, a home theatre, a cigar room, a wine cellar and an
American deli. To meet the needs of a global jet setting Indian, the
development has an ultra modern business centreand services like
concierge service for travel bookings, limousine hires, or currency
exchange airport.

8. Add to all the above, an in-house convenience store with a pharmacy
and a 24-hour coffee bar, the project promises to provide a
scintillating lifestyle.
Mumbai’s Luxury Residential Emerging Micro-Market: Western
Suburbs
It is estimated that by 2020, people earning above Rs. 20 lakh will
increase from 4 percent to 10 percent of Mumbai’s population which
translates to roughly six hundred thousand families. There will be a
need for luxury housing for these families in Western Suburbs.
The Western Suburbs are a hub of commercial activity with Bandra-
Kurla complex & Andheri Kurla Road emerging as thriving commercial
centres. This is fuelling a great demand for luxury housing in the
vicinity of these centres. The emergence of luxury housing in suburbs is
supported by higher land availability and a high FSI (twice as much as
in South Mumbai).
The luxury residential in Western Suburbs is being led two developers:
the Lodha group and the Oberoi group. These developers have
developed differentiated projects in suburbs backed by good sales &
marketing programmes.
These developers burst into the scene when they picked up real estate
that is not easy to come by in Mumbai. Oberoi got 80 acres of land that

9. had been pharmaceutical company Hindustan Ciba Geigy’s research
centre in Goregaon (a suburb near Andheri). Oberoi has developed this
area into an island of luxury development and commands a 25-30%
premium for its residential & commercial luxury development.
The Lodhas have launched a project called Lodha Fiorenza in Goregaon
as well. This project has been launched with Jade Jagger, the daughter
of Rolling Stones rocker Mick Jagger. Jagger has partnered with
London-based design firm Yoo Design Studio and is set to design 400
homes priced between Rs 3 crore and Rs 12 crore. The project has
received a good initial response with close to 100 units sold since the
launch.

10. Contact
Sarvajeet at sarvajeet@theadiva.com, +91 9920803060