In Navi Mumbai, a developer has pulled down old construction at an industrial complex and is pumping fresh concrete and steel into the guts of the site. Vishwa Green Realtors, in partnership with the owner, BK Modi’s Spice Group, is laying the foundation of a multi-storeyed business complex.
The transformation of the site in Turbhe represents the change along the 15-kilometre road stretch between Mumbai’s satellite cities of Thane and Navi Mumbai. It’s a decades-old industrial cluster with facilities of chemicals makers like Rallis India Ltd. to offices of Reliance Jio Infocomm Ltd. IKEA, too, is building its second Indian outlet in the area. Lured by tax and power incentives, developers have in the last five years turned defunct facilities into plush office blocks for information technology companies.
“One of the main reasons for this is the availability of land. On Thane-Belapur Road, there are huge industrial owners who can’t afford to run industries anymore,” said Mohanjeet Singh, a local real estate agent. So, the best option for them is to move out.” These sites are getting picked up by developers, he said.
Navi Mumbai was planned as a new business hub to take the burden off India’s financial capital. It didn’t pan out that way. Spinning mills in Mumbai’s Lower Parel area made way for office and apartment blocks, turning it into the central business district. Then Bandra-Kurla Complex emerged as the destination for banks to stock exchanges. But both the locations have run out of space. By comparison, besides abundant land, Navi Mumbai will have an airport and is being linked to Mumbai through India’s longest sea bridge.
Software services providers and consultants including Accenture Plc., L&T Infotech Ltd., Cognizant Technology Solutions Corp, Tech Mahindra Ltd., and eClerx Services Ltd. already have offices in the 27 square-kilometre Thane-Belapur belt. More have tied up with the business parks under construction. That’s because the area offers two key services that they require: dependable high-speed internet and power.
“Some of the major data centres are present in Navi Mumbai and all the major service providers have laid down their fibre optic cables here. Therefore, the IT parks enjoy excellent data connectivity in terms of speed and transmission,” Singh said. “As far as power is concerned, most IT parks have 100 percent power backup. Most of the developers also have feeder lines for high-tension power running through their IT parks.”
Vishwa Green is building leasable/saleable space of 6.1 lakh sq ft, according to Siddharth Khanna, the company’s director. The developer is building another IT park at Nerul, about 10 minutes’ drive from this one, offering saleable/leasable space of 2.2 lakh sq ft.
According to a report by Cushman & Wakefield, the IT-oriented real estate projects that are ready or under construction in Navi Mumbai include:
- Loma IT Park, Ghansoli: Ascendas Firstspace acquired land from Standard Industries, 0.64 million square feet of IT space ready, another 0.64 msf is expected to be ready this year. A residential project is coming up at the same location.
- Mindspace, Juinagar: K Raheja Group has developed three towers with 0.985 msf, and an additional supply of 0.75 msf is being planned. The developer plans to develop more space for the IT industry, besides a residential project.
- Rupa Renaissance, Turbhe: 1.4 msf of IT space under construction; expected to be ready by 2021.
In all, IT parks with a leasable space of 16 million square feet (built-up area) are ready, according to by Cushman & Wakefield. Another 6.66 msf of IT space is under construction. About a fifth of the total area of 40 million square feet has been developed for commercial use, including captive corporate centres.
A tweak in the policy of Maharashtra, India’s richest state, in 2015 triggered this blitz to set up IT parks. It provides for:
- 75-100 percent stamp duty exemption for IT/IT-enabled services in notified areas.
- Property tax on a par with residential rates.
- Subsidy on electricity tariff for the first three years at Re 1 a unit.
“We strongly feel Navi Mumbai is on the cusp of becoming the next IT hub of an emerging India,” Rounak Desai, director at Rupa Group, told BloombergQuint. “With several infrastructure projects and the international airport in the pipeline, Grade A office and IT/ITeS supply in Navi Mumbai is bound to gain substantial demand and traction in coming years.”
Supply Glut?
The prevailing rents for IT businesses in Navi Mumbai are quite competitive and the industry absorbed 30 percent of the available space in 2019, according to Rohan Sharma, head of research, Cushman and Wakefield.
According to the commercial real estate consultant, average commercial rent in Navi Mumbai is the cheapest compared with other IT hubs of Bengaluru, Hyderabad and Pune. It’s a third of the costs in Lower Parel in Mumbai.
The Thane-Belapur Road corridor is also the biggest office market in Mumbai at the moment, Sharma said. “We expect that the trend of converting industrial land to-IT space shall continue with higher FSI incentives (addition salable space) now available.”
Sharma, however, expects mostly large land parcels to gain advantage of this conversion and cautioned that a host of small industrial landowners building IT parks there may not get the same success. That’s because, he said, tenants tend to prefer better amenities and infrastructure.
Developers aren’t worried. “For office of 300-350 square feet, there will always be an undersupply. And for at least next 10 years, there won’t be any oversupply because companies across the country are moving to Navi Mumbai as the city has the best infrastructure and is improving its connectivity as well,” Khanna of Vishwa Green said. “This will indeed give the residential sector a big boost here.”
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