8 things you should know about India's costliest residential deal in Mumbai

According to local brokers, homebuyers in the Malabar Hill area of South Mumbai are generally High Net-Worth Individuals (HNIs) who can afford to purchase India's costliest homes in the range of Rs 1 lakh to Rs 2 lakh per sq. ft. These HNIs include CEOs, CXOs and business tycoons. (Photo credit: Mehul R Thakkar)

In India’s costliest apartment purchase, Bajaj Auto Chairman Niraj Bajaj recently bought a sea-facing triplex from Macrotech Developers, formerly Lodha Developers, in South Mumbai’s tony Malabar Hill area for Rs 252.5 crore.

The 31-storey project is called Lodha Malabar Palaces By The Sea. The total area of the three apartments is 18,008 sq.ft. (carpet area 12,624 sq.ft.) and the triplex comes with eight car parking slots, documents shared by IndexTap.com showed.

The stamp duty paid for the deal was Rs 15.15 crore.

This values the property at over Rs 1.40 lakh per sq. ft. on the total area of 18,008 sq. ft.

1)  Where is the project being built?

Malabar Palaces is being constructed on Walkeshwar Road in the Malabar Hill area, considered the most expensive residential area in the country.

2) What are the project specifications?

The building is designed to have parking spaces from level P0 to P4. The fifth floor will have a clubhouse and common area amenities. Apartments start from the sixth floor and go all the way up to 31 floors. The tower is spread across 1.08 acres and is scheduled to be completed by June 2026.

According to records of the Maharashtra Real Estate Regulatory Authority (MahaRERA), the developer has proposed to construct two wings, namely A and B, wherein 36 apartments of 4 BHK and a 5 BHK penthouse will be constructed.

The area of these apartments is expected to range from 3,842 sq.ft. to 11,635 sq. ft. approximately, according to RERA declarations by the developer.

3) When will the project be completed? 

According to the declaration made by the developer on the website of MahaRERA, the project is to be completed by June 30, 2026. The project site originally had a building on it which the developer has completed razing to redevelop it into a luxury project.

4) Who are the homebuyers in the area? 

According to local brokers, homebuyers in the Malabar Hill area are generally High Net-Worth Individuals (HNIs) who can afford to purchase homes in the range of Rs 1 lakh to Rs 2 lakh per sq. ft. These HNIs include CEOs, CXOs and business tycoons.

5) Other projects, their capital value and rental yield in the area 

The per-sq.ft. price in the area is around Rs 75,000 in the case of resale of units in old buildings in new projects without amenities, the rate is around Rs 90,000 per sq.ft., said Ritesh Mehta, Senior Director and Head for West and North, Residential Services & Developer Initiatives at JLL, a real estate consultancy.

Mehta added: "The capital appreciation in luxury projects is around 10 to 12 percent and the rental yield is around 2.20 percent. The locality has mix of players currently along with players like Lodha, Kalpataru and Runwal having their projects in the vicinity. The price per sq ft range in these projects and other new projects is between Rs 85,000 and Rs 2 lakh per sq.ft."

"The market in Malabar Hill and its surroundings is robust and certain buildings continue to be in demand for their address, location, gentry, state of maintenance and views. Rates can vary between Rs. 60,000 and Rs. 1 lakh per sq.ft. in this area with newer buildings quoting higher. New buildings are being quoted upwards of 1 lakh sq ft. Most of the older buildings are over 50 years old and capital appreciation is not more than 4-5 percent, depending on the building. Newer buildings have witnessed higher appreciation from the commencement of the project to delivery," said Reshmi Panicker- Executive Director of Land Services and Residential at Knight Frank India.

According to brokers, active developers in the area include Jindals (Carmichael Road), K Raheja Corp (Pleasant Palace), Runwal Group (Runwal Residence), Anchor Daewoo(South Ridge), Kothari Group, Lodhas, Kalpataru, Oberoi Realty, Ashford, Rohan Lifescapes.

Also read: D’Mart’s Damani seals country's largest real estate deal at Rs 1,238 cr for 28 luxury apartments

6) Redevelopment project 

Malabar Hill has a history going back to the British Raj. There is hardly any empty land in the area and it offers scope only for redevelopment.

"Malabar Hill and Walkeshwar are very niche in terms of real estate. They have India's most costly real estate, and currently the new inventory in this area is being released through redevelopment. In terms of notable developers,  Lodha and Kalpataru have a presence in this market,” said Ashish Narain Agarwal, founder and CEO, PropertyPistol, a real estate consulting firm.

"The per sq. ft. price in this area is between Rs 80,000 and Rs 1 lakh. In many projects undertaken by Lodha, the price quoted is above Rs 1 lakh per sq.ft., owing to them being ultra-luxury projects where only HNIs invest," Agarwal added.

He added, "In the case of Lodha Malabar Palace, the developer is quoting a price of Rs 1.80 lakh per sq ft. Later, the closure depends on individual deals and negotiations."

"The redevelopment practice in the area currently is such that tenants are being paid outright by the developers if it is a chawl system or places where there are landlords. However, in case of ownership flats, the flat owners are asking to rehabilitate them on the same land parcel. The plot sizes are generally small, say in the range of 1,000 to maximum 10,000 square meters, owing to which not many big players take interest. Also, there are several restrictions on how much Floor Space Index (FSI) can be used in these projects, owing to its proximity to the sea," he said.

7) Height restrictions

Malabar Hill offers an unhindered view of the sea. The Mumbai civic body, known as the Brihanmumbai Municipal Corporation (BMC), in January 2020 published a report wherein it identified 67 plots where the height of structures has to be restricted, as increasing the height during redevelopment of a particular building could obstruct the view of Marine Drive, Queen’s Necklace, Backbay and Girgaum Chowpatty from the viewing gallery at Kamala Nehru Park in Malabar Hill.

The BMC would offer incentives in lieu of height restrictions for these 67 plots.

Also read: 5 things about Radhakrishna Damani's record Mumbai property deal worth Rs 1,238 crore

8) Is the cap of Rs 10 crore on reinvestment on capital gains fuelling such deals? 

Local brokers say that the uber-luxury market will be on fire until March 31, 2023. This is on account of a provision introduced in Budget 2023, announced on February 1, that was expected to have an impact on the sale of such properties from April 1. A Rs 10-crore cap has been imposed on the reinvestment of capital gains from the sale of long-term assets, including property. No such cap is applicable at the moment.