BUS IN ES S

BRIEFIN G

SPINNING THE MILLS

MILL LAND REDEVELOPMENT IN MUMBAI

Au gust 20 1 0 | A C&W Indi a Pu b l i c ati on

CONTENTS EXECUTIVE SUMMARY

1 Executive Summary With an unrelenting global population shift from rural to urban
3 Mumbai’s Textile Mills: Their Rise, Fall areas, sustainable development of our cities is of vital importance
& Redevelopment
for the present as well as future generations. Issues of urban
5 Key Pull Factor Driving Mill Land development, such as creation of adequate infrastructure, public
Redevelopment
utilities, mass housing, public spaces and commercial real estate are
7 Staggered Supply: High Cost
matters of grave concern, particularly, for emerging economies. To
7 Changing Paradigm in Mill Land
Redevelopment stay on course of achieving its development objectives, while
9 New Address for Residential Space ensuring the greatest good for its citizens, India too needs to focus
10 Widening Gap between Supply and
on rejuvenation of its cities and urban spaces.
Demand
POSSIBLE LAND RELEASE SOURCES FOR URBAN REDEVELOPMENT IN MUMBAI
11 Shift in Axis for Office Space
Mill Land Port Trust Land Salt Pan Land
12 Bottlenecks to Reinvention of Mill Approx. 600 acres in the Approx. 1,800 acres along Approx. 5,000 acres in
Lands heart of Mumbai the estern waterfront the city’s suburbs

13 Outlook
15 About Cushman & Wakefield India, Best Option Challenges Challenges
In the light of the lLack of clear lDelicate eco-zone
Research & Business Analytics Group challenges faced by other ownership lCoastal Regulation
areas, the mill lands are the lLack of proper Zone norms
most viable options for planning & vision lCity’s last defence
redevelopment – that too lEnvironmental against floods
For more information please contact: in the heart of the city. concerns
Kaustuv Roy
First Floor, Mafatlal House
Padma Bhushan H. T. Parekh Marg
Churchgate, Mumbai 400 020 Mumbai, with nearly half of its population residing in slums
Tel : 91 22 6657 5555
Fax : 91 22 2202 5165
and urban sprawls, is in dire need of a long-term urban
Email: kaustuv.roy@ap.cushwake.com redevelopment project. The realty values of this financial capital are

already marked by sky-high trends, making it one of the costliest commercial destination in the world. Ever-
increasing demand for real estate across asset classes, coupled with near lack of free space, further adds to this
deadlock. In such a scenario, the only possible solution seems to be sustainable redevelopment projects
involving time-bound release of surplus land.

Mumbai's post-industrial areas include the land belonging to the Mumbai Port Trust (MbPT) and to its
erstwhile textile mills. While the MbPT has approximately 1800 acres of mostly derelict land and underutilized
buildings along the eastern waterfront, the mill lands account for some 600 acres in the heart of Mumbai.

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Despite being nearly thrice the total mill lands area, MbPT land development appears to be
untenable owing to various compelling reasons, including policy issues, environmental concerns,
Coastal Regulation Zone (CRZ) norms, etc.

On the other hand, Mumbai's saltpans, admeasuring approximately 5,000 acres, are nearly eight
times the size of its defunct mill lands. Though the state government and municipal authorities have
been considering these protected areas for mass housing and commercial development,
environmental considerations need to be adequately addressed for this to happen. This, therefore,
leaves Mumbai's mill lands as the sole viable option for reclaiming land for public use.

Non-operational textile mills are also present in cities like Kolkata, Pune and Ahmedabad; but
unlike Mumbai's mills, most of these are located in the peripheral zones, and these land parcels are
therefore not as lucrative as those standing in the heart of Mumbai. And neither do any of these
other cities face as acute a space shortage as Mumbai, which is sea-locked on three sides. The
protracted controversy over these mill lands, however, continues — threatening to turn into a lost
opportunity, unless acted upon with some immediacy.

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MUMBAI’s TEXTILE MILLS: THEIR RISE, FALL & REDEVELOPMENT

The growth of the textile industry in India began in the 1860s to cater to the increasing demand for
cotton in colonial Britain's world market. Large scale cultivation of cotton in Maharashtra and
neighbouring states, coupled with the added geographic advantage of trading with Europe, made
the city an ideal location for the growth of the textile industry. Mumbai's (earlier known as Bombay)
th
supremacy in the textile industry lasted well into the latter part of the 20 Century. As a result,
within a span of about 50 years of the first mill beginning operations, the city witnessed the
establishment of over 80 mills (textile and allied businesses).

By the end of the 20th Century, however, most mills in the city were faced with global
competition, increasing labour unrest and declining profitability. As a result several textile mills shut
down operations, freezing almost 600 acres of prime land in the centre of the city.

The emergence of Mumbai as a prime business centre in the 1990s attracted various foreign
firms to set up base in the city. The eventual evolution of Mumbai as a major global financial hub
over the last two decades, together with its growing population base and changes in regulatory
policies, gave mill owners an opportunity to encash into the vast potential of these mill lands. It was
widely recognised that these defunct industrial areas, if redeveloped, would make available
substantial real estate for commercial and other public usage, while providing better amenities,
infrastructure and modern architecture for its citizens. The redevelopment of the mill lands was
also expected to result in the decongestion of South Mumbai, while controlling surging capital
values in these locations by increasing supply near South Mumbai. Kamala Mills and Phoenix Mills
were among the earliest players to commercialise textile mill lands in Mumbai.

PROGRESSION IN MILL LAND REDEVELOPMENT

Growth Decline Redevelopment Way Forward

1854 - 1925
l First Indian cotton mill
starts operations.
l Increasing exports
fuels growth of textile
industry in Mumbai.
l Over 80 mills are set
up in the city by 1915
to service the
increasing demand for
textile exports.
1926 - 1990 1991 - 2009 2010 - 2015
l Emergence of new In 1991, Mumbai land
l By 2015, mill lands in
l
global players (eg. regulation laws are Mumbai are likely to
Japan) and slowdown amended to allow for witness office space
in demand leads to the development of development of about
drop in profitability. closed mill lands. 8.25 million sq.ft.
l By 1953 only about 53 The State
l A significant number of
l
textile mills remain government amends housing units are
operational in the city. Development expected to be
Control Regulations developed in a phased
l The prolonged strike
(DCR) allowing manner on various mill
of 1982 leads to
commercial lands over the next 2
closure of many more
redevelopment of to 3 years.
mills.
mill land.
In June 2005, the first
l
mill land is auctioned
by the National
Textile Corporation
in central Mumbai.

Source: Cushman & Wakefield Research

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To free land for physical and social development of the city, the state government of
Maharashtra amended the Development Control Regulations (DCR) and other rules/regulations
related to existing sick mills.
Some of the major amendments in the DCR and their impact on mill land development:
AMENDMENTS AND IMPACT OF DCR ON MILL LAND DEVELOPMENT
Amendments
1991
l The Maharashtra State Government amended
land regulation laws, allowing redevelopment
of mill land parcels. DCR 58 introduced.
l Regulation 58 – popularly known as “one-third
formula” – was framed, allowing mill owners
to sell/develop one-third of their land for
commercial use, and provide one-third to the
BMC for creating public amenities like open
spaces. The remaining land was to be given to
MHADA for the development of public
housing.
2001
l DCR 58 was amended to DCR 58 (I) which
stated that only vacant land on mill premises
with no built-up structure would be divided by
the “one-third” formula.
2005 - 2006
l Mumbai high court puts a stay on mill land
redevelopment projects.
l Supreme Court stays high court order, asks
buyers to submit their development plans to
BMC in accordance with amended regulation
DCR 58 (I).
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Impact
The amendment was expected to free about 400
l
acres of land in the city centre for the
development of open spaces, parks and low cost
affordable housing for mill workers.
As only a fraction of the land (one-third) was
l
available for commercial use, most of the mill
owners stayed away from undertaking any kind
of redevelopment projects.
With more area available for commercial use,
l
the amendment resulted in sale and
development of mill lands. However, only
marginal land was left for public amenities and
housing.
Also resulted in National Textile Corporation
l
(NTC) auctioning off five mills with a total land
area of 50 acres in Central Mumbai.
Development of mill lands finally begins in the
l
city. This resulted in significant new supply in
Central Mumbai, altering the skyline of this
micro market.
4
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KEY PULL FACTOR DRIVING MILL LAND REDEVELOPMENT

The redevelopment of mill lands in Mumbai is driven by several key factors, such as constrained
availability of land, strategic mill locations and the availability of support infrastructure. Some of
these key factors are analysed here in detail:

Constrained Availability of Developable Land

Mumbai's inability to expand, while keeping the CBD the centre of activities, has always been a
major concern. In spite of being one of the most densely populated cities in the world, real estate
development in Mumbai has been largely restricted. Development has only been towards the
northern and peripheral locations – further away from the CBD. Additionally, several regulatory
limitations like Coastal Regulation Zone (CRZ) norms and Floor Space Index (FSI) restrictions
have further curtailed the real estate development of the city. Located between the CBD and the
growing suburbs, these unused large parcels of mill land in the centre of the city are lucrative for
future development.

Strategic Location
Most mill lands in the city are located in and around Central Mumbai; in locations like Lower Parel,
Parel, Worli, Mahalaxmi and Dadar. Given their strategic location and availability of sound
infrastructure, Cental Mumbai is often
MUMBAI MILL LAND MICRO MARKETS
viewed as Mumbai's extended CBD. MILL LAND LOCATIONS
Lower Parel/
With almost all existing as well as Others
13% Parel
32%
upcoming precincts of the city Lalbaug
13%
providing good connectivity to Elphinstone
4%
Central Mumbai through road and rail
Prabhadevi
networks, mill lands in Mumbai enjoy 5% Dadar Mahalaxmi
Worli
10% 13%
10%
the following location advantages:
Source: Cushman & Wakefield Research
l Close proximity to established
commercial hubs like Churchgate
MILL LAND LOCATIONS
and Bandra Kurla Complex
Andheri
l Good connectivity to existing and Metro Rail Powai

Bandra Kurla Complex

emerging residential corridors Ghatkopar-
Chembur
Bandra
Wadala

l Accessibility to suburban and Dadar

Central Lower Parel

Wadala - Chembur
Monorail

Mumbai
peripheral locations like Ghatkopar, Bandra Worli Sea link
Fort Fountain
CST
Worli
Chembur, Mulund, Thane and Navi 5KM
Churchgate
Breach Candy CBD
Mumbai through eastern Pedder Rd. 10KM
Colaba
Nariman Point
15KM
expressway and central railways 20KM

Major Residential Hubs Major Commercial Hubs

l Availability of retail, entertainment Major Retail Hubs Major Train Station
Major Flyover / Bridges Major Infrastructure Project
and leisure facilities in the Airport Underway

Source – Corres, 1996 immediate vicinity Source: Cushman & Wakefield Research

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l Presence of several educational institutes, hotels and hospitals, offering sound social
infrastructure.

Comparatively Lower Rental & Capital Values

In spite of its strategic location, real estate values in Central Mumbai are comparatively lower than
some of the other prominent micro markets in the city. As a result, these precincts are becoming
increasingly attractive for both commercial and residential end users.

COMPARATIVE ANALYSIS

Zone Commercial Office Residential - Mid Range

Rental Values Capital Values Capital Values
(INR/sq.ft./month) (INR/sq.ft.) (INR/sq.ft.)

Central Mumbai 190-200 17,000 - 22,000 16,000 - 30,000

South Mumbai 250-300 28,000 - 30,000 30,000 - 50,000

North Mumbai (BKC) 225-275 25,000 - 30,000 18,000 - 26,000

Source: Cushman & Wakefield Research

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STAGGERED SUPPLY: HIGH COST

With many mill lands being under litigation or debt ridden, the availability of these land parcels for
redevelopment has been staggered. While their unlocking was expected to bring a gross
rationalisation of values in the region, the actual costs have been remarkably higher due to the large
gap between demand and limited availability. Given the potential of mill land development,
developers have been compelled to pay high land prices for them. Mill land auctions by NTC were
also viewed as an excellent opportunity for well capitalized developers to create high value land
banks. As a result, the average values in these locations began to appreciate at a higher rate than
Staggered release
expected.
of mill land has
led to slower Some significant mill land transactions:
supply and higher
cost. SIGNIFICANT MILL LAND DEAL IN MUMBAI

Name of the Mill Year Micro Market Acquirer Area Deal Price
(Acres) (INR Million)
Mumbai Textile Mills 2005 Lower Parel Jawala Real Estate 16.63 7,022
(Sakserja Mills) (DLF Group)

Elphinstone Mills 2005 Elphinstone Road Indiabulls Real Estate 8.08 4,410

Kohinoor Mills No. 3 2005 Dadar Matoshree Realtors 4.91 4,210

and Kohinoor Group

Jupiter Mills 2005 Elphinstone Road Indiabulls Real Estate 11.13 2,760

Apollo Mills 2005 Parel Lodha Group 7.33 1,800

Dawn Mills 2006 Lower Parel Peninsula Land 6.50 1,200

Poddar Mills 2010 Worli Indiabulls Real Estate 2.39 4,740

Bharat Mills 2010 Woril Indiabulls Real Estate 8.38 15,050

Source: Complied by Cushman & Wakefield Research based on publicly available information through media and other sources

CHANGING PARADIGM IN MILL LAND REDEVELOPMENT

Driven by recent improvements in demand for MILL LAND REDEVELOPMENT IN MUMBAI

residential and commercial space in the city, many 350

developers are expected to aggressively pursue 300

250 146.83
Area (Acres)

opportunities to create new land banks. With 200

217.88
almost 60% of privately held mill lands already 150
106.44
100
developed or currently under development, 50
39.06 80.84
10.92
upcoming mill lands for auction are expected to 0
Public Ownership Private Ownership

generate significant interest from developers. Developed Under Development To be Developed

Source: Cushman & Wakefield Research

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Soaring demand for mill lands can be gauged from the fact that “Reserve Selling Price” of
upcoming mill lands for auction is almost two to three times higher than the “Selling Price” of mill lands
a few years ago.

Mill lands redevelopment in the city has witnessed a paradigm shift in recent years. In 2006-07,
Mumbai's real estate was characterised by all-time high rental and capital values, increasing demand
for office space and limited Grade A supply. Additionally, the city also witnessed steep retail real
estate growth and the entry of several new brands. As a result, most mill lands were envisaged to be
redeveloped as high end commercial projects catering to office and retail sectors.

However, the global economic crisis of 2008, which severely impacted the Indian real estate
sector, altered the nature of mill land development in the city. Low demand, plummeting rental
values and large upcoming supply, raised concerns on financial feasibility of office and retail
developments over mill lands. As a result, many mill land projects, most of which were still at a
planning stage, were converted into residential projects.

Impact of Recent High-Value Mill Land Auctions

The recent auction sales of the adjacent mill lands of NTC's Poddar Mill and the Bharat Mill,
bought by Indiabulls Real Estate (IBRE), works out to approximately INR 2,000 million/acre.
IBREL now has a sizeable land parcel of approximately 11 acres in land-scarce South Mumbai, with
clear title. Additionally, IBRE might be given construction rights on these lands in exchange for a
government-approved multi-storied public parking lot, for which IBRE might be awarded an extra
floor space index (FSI) as high as 4 in the free sale component. It is most likely that these lands will
be utilised for high end residential projects that will be sold in the range of INR 27,000 - 45,000 per
sq.ft. With a typical 3 BHK apartment being sold in the INR 5 crore bracket, these residential units
will largely stay out of the reach of ordinary Mumbaikars. While a public multi-storey car park
(MLCP) might be a bonus for space-starved citizens, but with the municipality already having
sanctioned over 25,000 parking slots in the Worli-Parel-Sewri micro market, the need for yet
another MLCP is debatable.

CAPITAL VALUE MOVEMENT ACROSS MAJOR RESIDENTIAL KAY FACTORS DRIVING HOUSING DEMAND IN
PROJECT ON MILL LANDS CENTRAL MUMBAI

70000
Limited
l opportunity for new residential developments in
South and South Central Mumbai
Average Capital Values

60000
50000
With
l capital values in South and South Central Mumbai
(INR/sq.ft.)

40000
being among the highest in the country, there is
30000
20000
increasing demand for residential apartments near South
10000
Mumbai with better amenities.
0 Lower
l capital and rental values in Central Mumbai as
Planet Godrej Ashok Towers Beaumonde
compared to its counterparts in South and South
Launch Price 2Q 2009 2Q 2010 Central Mumbai.

Source: Cushman & Wakefield Research

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NEW ADDRESS FOR RESIDENTIAL SPACE

Changing lifestyles and an increasing demand KEY DRIVING FACTORS FOR PREMIUM HOUSING
LAUNCHES IN CENTRAL MUMBAI
for apartments with the latest amenities and
l Buoyant demand for premium housing from HNIs
architecture has resulted in a growing demand and NRIs
for premium housing projects. With l Growing demand for apartments with better
opportunity for any new development in amenities and modern architecture
South and South Central Mumbai having l Higher profit margins in the premium housing
segment
become largely exhausted, Central Mumbai is
fast emerging as the preferred location for
new residential space in the city. Besides, most of the existing housing stock in South Mumbai is
dated and lack the latest modern amenities and services.

MAJOR UPCOMING RESIDENTIAL PROJECTS ON MILL LANDS IN MUMBAI

Mill Land Name of Developers Name of Project Approx. Units

Mumbai Textile Mills DLF NA 1,000

(Sakserja Mills)

Pidilite Industries D B Realty Orchid Heights 640

Swan Mills Peninsula Land Ashok Gardens 600

Hindustan Mills K. Raheja Corp Vivarea 492

Crown Mills D B Realty Orchid Crown 342

Srinivas Mills Lodha Group World One 300

Apollo Mills Lodha Group Lodha Bellissimo 267

Elphinstone Mills Indiabulls Real Estate Indiabulls Sky Suites 215

Apollo Mills Lodha Group Lodha Primero 180

Spring Mills Bombay Dyeing NA 160

Sri Ram Mills Sri Ram Urban Infrastructure Palais Royale 120

Jupiter Mills Indiabulls Real Estate Indiabulls Sky 102

Jupiter Mills Indiabulls Real Estate Indiabulls Sky Forest NA

Khatau Mills Marathon Nextgen and NA NA

Adani Infrastructure

Compiled by Cushman & Wakefield Research

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OTHER MAJOR RESIDENTIAL PROJECTS IN CENTRAL MUMBAI

Name of Developers Name of Project Location Approx. Units

Unitech The Residences Parel 250

Unitech Woodside & Ascot Dadar 240

Kumar Builders Kumar Echlon Worli 200

DB Realty Orchid Enclave – II Mumbai Central 188

Orbit Group Orbit Terraces Lower Parel 108

Apartments with
a unit size of Orbit Group Orbit Grand Lower Parel 88
1,200 to 1,500 Rupji Constructions Rupji Arena Lower Parel 88
sq.ft., within the
Ahuja Group Ahuja Towers Worli NA
price range of
INR 30 to 50 Compiled by Cushman & Wakefield Research

million will
witness high
absorption rates. WIDENING GAP BETWEEN SUPPLY AND DEMAND

Over the next three to four years, Central Mumbai UPCOMING RESIDENTIAL UNITS IN CENTRAL MUMBAI
is expected to witness a residential supply of 3000
No of Upcoming Apartments

approximately 7,000 apartment units. 2500

Interestingly, out of this total upcoming supply, 2000

1500
nearly 4,400 apartment units are coming up on 1000

mill lands. 500

0
2010 2011 2012 2013
With an estimated demand of approximately
Source: Cushman & Wakefield Research
2,300 to 2,600 residential units over the next three
years, Central Mumbai will be faced with a significant supply/demand gap. With supply
significantly outstripping demand, capital values in Central Mumbai would witness downward
pressure. Moreover, availability of mill lands through auctions in the near future would lead to
additional supply in this precinct. With locations like Worli and Prabhadevi being the preferred
choice for buyers, taking into account better infrastructure facilities, the residential segment of
Lower Parel will witness correction in the near future.

Right pricing is the most critical component driving demand in these upcoming residential
projects on the mill lands of Lower Parel and Parel. Majority of upcoming apartments are being
priced over INR 70 million; and demand is being driven solely by the high income segment. With
transportation issues and existing congestion levels emerging as the key drawbacks, capital values in
Lower Parel should be lower than that of Worli and Prabhadevi which provide better social and
physical infrastructure facilities. Moreover, apartments with smaller unit sizes of 1,200 to 1,500
sq.ft., with price levels in the range of INR 30 to 45 million, will lead to higher absorption rates.

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SHIFT IN AXIS FOR OFFICE SPACE

Mumbai's CBD (comprising Churchgate and Nariman Point) and Bandra Kurla Complex (BKC)
have been the commercial office space hub till the recent past. However, with mill lands being
redeveloped into Grade A office space, Central Mumbai has currently emerged as an extended
CBD for Mumbai. Central Mumbai is also being preferred by large Indian and multinational
corporate houses as an alternative to the CBD. Larger floor plates with better amenities,
comparatively lower rentals, good connectivity to other micro markets, proximity to residential
precincts, etc., have all worked in favour of mill land redevelopment in Central Mumbai.
Migration of
multinationals to
COMPARATIVE ANALYSIS OF THREE MAJOR MICRO MARKETS OF MUMBAI
central and
suburban micro Central Mumbai CBD Bandra Kurla Complex
markets, along Average Base Rent
with fewer Upcoming Supply
opportunities for
Amenities
new development,
Infrastructure & Connectivity
will reduce the
importance of High Moderate Low
Mumbai's CBD in Source: Cushman & Wakefield Research

the foreseeable
future. Availability of mill lands for redevelopment has altered the dynamics of commercial office space in
the city. Central Mumbai's share of total office stock is expected to rise from 5% in 2000 to 14% by
2012. The emergence of Central Mumbai as a major commercial office hub has been further aided by
continued migration of several large multinationals from the CBD to Central Mumbai and other
suburban locations like BKC and Andheri. As a result, the CBD is expected to witness reduced
importance as a major commercial hub in the near future.

INCREASING NON-CBD SUPPLY

CBD CBD Lower

36 % Worli Lower 20% Lower CBD Parel
Worli Parel
12 % Parel
8% Worli 14 %
5% 6% 7% 4%

2000 2006 2012

Source: Cushman & Wakefield Research

Central Mumbai, which has an existing office stock of 4 million sq. ft., will add about 8 million
sq.ft. by 2013; the majority of which will cater to the IT/ITeS sector. In spite of recent demand
improvements, the upcoming office space supply in Central Mumbai is significantly higher than the
anticipated demand. Additionally, with availabilities of low cost alternatives catering to the IT/ITeS
sector in locations like Andheri, Malad and Thane, Lower Parel is expected to witness downward
pressure on capital and rental values in the short to medium term.

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MAJOR COMMERCIAL PROJECTS ON MILL LANDS IN MUMBAI

Mill Land Name of Project Area (million sq.ft.) Current Status

Jupiter Mills One Indiabulls Centre 1.43 Operational

Elphinstone Mills Indiabulls Finance Centre 1.67 Under Construction

Ruby Mills The Ruby 0.85 Under Construction

Jalan Mills NA 1.35 Under Construction

Apollo Mills Lodha Excelus 0.38 Operational

Upcoming
IT/ITeS-specific Dawn Mills Peninsula Business Park 1.20 Under Construction
commercial office Century Mills NA 2.00 Under Construction
supply in Central
Mumbai is Source: Cushman & Wakefield Research

expected to
outstrip demand,
BOTTLENECKS TO REINVENTION OF MILL LANDS
pressurising rental
and capital values
While mill land redevelopment has transformed the landscape of Central Mumbai considerably, it
in the long term.
has also unearthed some critical hindrances that the micro market could face in the near future.

Limited Infrastructure Development

Despite large scale real estate development (both commercial and residential), there is a
conspicuous absence of infrastructure development in the micro market. This location has
extremely constricted roads that are likely to come under severe pressure with increased traffic flow
expected to be generated by the growing number of commercial office space and residential spaces.
The Bandra-Worli Sea Link as well as the proposed Metro Rail project are expected to have very
limited impact on easing heavy traffic flows here.

Rationalisation of Values
Even after the mill lands were initially opened up for redevelopment, only a fraction of the
estimated supply was actually made available for public use. Thus the impact that this additional
supply was expected to have in terms of rental and capital values, stood largely negated. With a
large part of mill land tracts being either involved in legal tussles, heavily indebted or already
mortgaged, the prospect of any new mill lands becoming available for development in the near
future is quite doubtful. Value rationalisation, therefore, will probably have to take a backseat for the
time being.

Downward Pressure on Financials

While this central micro market is expected to witness substantial upcoming office supply, demand
for office space may not increase proportionately enough. Even in a scenario where the IT/ITeS
sector – one of the principal growth drivers for commercial office space in the city – regains its
historical growth rate, demand would remain focussed on low cost micro markets like Navi Mumbai

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and Thane. As a result, rental values in these micro markets are likely to come under pressure. This
downward pressure on rental and capital values could, consequently, force investors to give such
projects a miss.

POSSIBLE IMPACT OF INCREASED LAND SUPPLY IN CENTRAL MUMBAI

Infrastructure Development Changing Lifestyle Real Estate Impact

l Large scale redevelopment of l Better planned projects to l Surplus supply will help
mill lands will strain civic suit modern living stabilize exorbitant land rates
infrastructure amenities like
l Better lifestyle amenities like l Increased housing supply will
road transportation, water
parking space, recreation & cause cap value correction in
supply, etc., in Central
sports areas, security Central Mumbai
Mumbai.
provisions, etc.
l Commercial office market
l The fast paced real estate
l Better design & architecture might witness strong
construction will compel
over older generation supply competition from upcoming
development of support
supply in Central Mumbai and
infrastructure in Central
other locations like Andheri,
Mumbai.
Thane, Navi Mumbai, etc.

OUTLOOK

There is an urgent need for a time bound redevelopment policy for the city at present. The absence
of any such policy towards the redevelopment of mill lands has resulted in inconsistent and
sporadic development of these land parcels. As a result, the task of moderating surging capital
values in Mumbai, which was one of the primary objectives of redeveloping mill lands, has not yet
seen much success.

Cushman & Wakefield Research is of the opinion that a time bound, development plan
spanning approximately 10 years for mill lands could add significant supply across both residential
and office sectors. Such a planned policy is expected to lead to the development of approximately
17,000 to 22,000 residential units, and nearly 20 million sq.ft. of office space supply, over the next
10 years. Moreover, a stable upcoming supply trend is expected to help moderate residential capital
values across both Central and South Mumbai, while influencing values in other parts of the city.

CONSISTENT AVAILABILITY OF MILL LAND FOR DEVELOPMENT WILL HELP MODERATE RENTAL AND CAPITAL VALUES ACROSS
RESIDENTIAL AND OFFICE SECTOR

RESIDENTIAL SECTOR OFFICE SECTOR

80 4000 6
70 3500
5
Area (Million sq.ft.)

60 3000
50 2500 4
40 2000 3
30 1500
2
20 1000
1
10 500
0 0 0
2010 2012 2014 2016 2018 2020 2010 2012 2014 2016 2018 2020
Supply - Residential Demand - Residential Mill Land Release Supply - Office

Source: Cushman & Wakefield Research

INDIA REPORT | AUGUST 2010 13

Spinning the Mills - Mill Land Redevelopment in Mumbai

A C & W I N D I A P U B L I C AT I O N

Mill lands in Mumbai, which have been a driver for growth and employment till the 1990s have yet
again emerged on the centre stage, providing huge potential for development activity in the city. Mill
land redevelopment on other hand, given its geographic and economic benefits, is an ideal and
opportune case for urbanisation, focussing on the social, economic and financial benefits of all
stakeholders. The city, however, has failed to reap the anticipated benefits from the redevelopment
of these land parcels due to the sporadic and slow development pace over the years. The real
challenge towards mill land redevelopment lies in the creation of a holistic approach that should
focus on some of the following aspects:

Regulatory Regime
Regulatory policies governing mill land have largely been reactionary. These policy changes related
to mill lands have undergone frequent changes resulting in the slow development of mill land.
Going forward these policies will have to be reoriented such that not only do they pace up the
process of bringing mill lands into the property market, but also cater to the interest of various
stakeholders (mill owners, current occupiers, environment groups, state government, etc.).

Efficient Land Utilisation

A balance in development on mill land (e.g. commercial, residential, retail, public utility) needs to be
brought in. A planned and guided usage of mill lands will not only ensure a balanced
supply/demand equation, but also moderate price movements curbing artificial shortage of supply.
The release of large supply of mill land at preferred locations would create a surplus, leading to
stabilisation of values.

Infrastructure Development
In order to transform the micro market into a successful real estate destination, a collective
approach of developing infrastructure (i.e. improved transportation and better utility services) is of
paramount importance. The longstanding stalemate on redevelopment of mill lands seems to be
ending, with many mill lands expected to undergo redevelopment in the coming months. As many
developers are keeping a close watch on these last large available land parcels in the city, the skyline
of Central Mumbai is poised for a significant change.

INDIA REPORT | AUGUST 2010 14

Spinning the Mills - Mill Land Redevelopment in Mumbai
A C & W I N D I A P U B L I C AT I O N
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This report has been prepared solely for information purposes. It does not purport to be a complete description of the markets or developments contained in this material. The
information on which this report is based has been obtained from sources we believe to be reliable, but we have not independently verified such information and we do not
guarantee that the information is accurate or complete.
INDIA REPORT | AUGUST 2010
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