Navi Mumbai's fringes are the next frontier for Mumbai's offices

Navi Mumbai's airport is driving office demand in the city's fringes

The far reaches of Mumbai's satellite city Navi Mumbai, such as Kharghar, Panvel, and areas near the Navi Mumbai International Airport, may emerge as the new destination for large-scale offices in the metropolis, as improved connectivity as well as significant arbitrage in rentals make the area an attractive proposition for tenants, especially large enterprises.

A report from real estate data analytics firm CRE Matrix shows that the Navi Mumbai area has around 12.3 million square feet in offices under development, with significantly lower office rentals, compared to the rest of Mumbai, at around Rs 75-Rs 80 per square foot per month. Cheaper housing (20-30 percent lower home prices) is also expected to drive more offices to be closer to their employees, enhancing productivity for enterprises.

"Areas such as Kharghar and Panvel have one of the cheapest office rentals among the satellite cities of India, even lower than markets such as Greater Noida in the National Capital Region  (NCR). The airport is a major driver of the development of new offices, and enterprises of all sorts -- from banks to consultancies to logistics firms -- will look to move into the area, especially those which want to have rentals under the Rs 100 per square foot per month-range," said Abhishek Kiran Gupta, co-founder and CEO of CRE Matrix.

Tender for international financial hub

Planners and major infrastructure developers have also taken the cue, with the area's planning authority, the City and Industrial Development Corporation (CIDCO), releasing a tender for the development of an international financial hub, similar to that of Mumbai's Bandra-Kurla Complex, on a 120-acre plot in Kharghar.

The facility, which is expected to be developed over 20 years, is likely to see interest from both local and national level developers, as well as large fund sources, property experts said. CIDCO has a significant land bank in the area, and has ramped up planning for the hub ever since major pieces of infrastructure, such as the new airport and the Navi Mumbai Metro, have started to reach scale.

While connectivity has been regularly flagged as an issue in these areas, under-construction and planned extensions to both the Navi Mumbai Metro and the Mumbai Metro may alleviate some of the mass transit issues, observers said. This is even as transit options to the Navi Mumbai Airport Influence Notified Area (NAINA), an area spanning 170 villages in a 25 km-radius of the airport, is expected to remain in the form of roads.

Railways join the bandwagon

The Indian Railways has also got into the act, utilising some of its extensive freight network in the area to serve the Jawaharlal Nehru Port and various industries, for passenger services as well under the suburban network. The railways are adding capacity on the Panvel to Karjat and Panvel-Diva-Vasai corridors in order to make them upto speed for frequent suburban trains, which can unlock increased connectivity to upcoming areas in the region, as well as to part of NAINA.

While the market is dominated by local developers, larger builders have also been making a significant play for the area. The Adani Group, which is the lead developer of the new airport, is slated to come up with an integrated city akin to its Shantigram development in Ahmedabad, that will include homes, as well as offices, retail, and convention centre facilities. The development is expected to cover around 1,000 acres at the NAINA.

Listed developers, such as Godrej Properties, are also testing out their new office platforms starting with Navi Mumbai's outskirts. At its Godrej City project in Panvel, the company launched the first office development under its Nexspace platform, and has also been strata-selling offices to both investors and occupiers.

"A large share of the enquiries are from businesses exploring spaces to set up their own offices, particularly those looking to establish an early presence in a region that is witnessing strong infrastructure-led growth, while some investors are also evaluating it as an investment opportunity," said Amitesh Shah, CEO-Mumbai zone, Godrej Properties.

Shah added that the firm is receiving enquiries from a diverse set of sectors, such as healthcare companies, fintech firms, logistics players, infrastructure developers, legal consultants, brokerage and consultancy companies, as well as real estate advisory firms.