Nariman Point: The Quintessential Commercial Hub of Mumbai
Nariman Point is located on the extreme southern tip of Marine Drive in South Mumbai. Considered to be the `Manhattan’ of Mumbai it is one of the major financial districts of India, housing international & Indian financial services and brokerage companies. Apart from this, it is also home to key government offices and Reserve Bank of India (RBI).
Over the last 3-4 decades, Nariman Point has been an ideal commercial hub & the Central Business District (CBD) for Mumbai. This can also be attributed to the nature of the city, which was dependent on its port for its economy. Nariman point being cornered with sea from three ends, offered an ideal environment for businesses & trade.
Evolution of CBDs in Mumbai
Interestingly, Nariman Point was not Mumbai’s first Central Business District (CBD). The earliest business centre was Ballard Estate, which was the city’s commercial hub in the late 18th century and early 19th century. Then, businesses slowly moved to the Fort area, which ruled in the mid-19th century. As the city kept growing, Nariman Point was developed in the early 1970s to serve small businesses and establishments.
Although still a prominent commercial market, in terms of Location Attractiveness Index, Nariman Point is considered as an above average commercial markets, with its monopoly being under threat from other emerging commercial markets such as Bandra Kurla Complex (BKC) & Lower Parel etc.
Accessibility: Being the CBD, Nariman Point has the distinct advantage of proximity to the Western Line, Central Line and the Harbour Line Terminus Stations i.e. Churchgate and Victoria Terminus and has access to major expressways and Freeways of Mumbai. However, the overload of passenger traffic in the Mumbai local trains, and the traffic congestion on the narrow roads of South Mumbai is seen as a disadvantage of working in the given CBD.
Infrastructure: The basic infrastructure requirements for any commercial real estate districts are power, hotels, parking and telecommunication facilities. Al though Nariman point is boastful of a strong infrastructure, parking issues are increasingly haunting the location. In addition, the buildings are old and worn out compared to the upcoming new structures in Lower Parel and BKC.
High End Residential Developments: Generally the development of commercial real estate in the CBD leads to fueling the demand of high-end residential real estate in the nearby locations. As a result some of the best residential developments in any city would be in close proximity to the CBD. Similarly in case of Nariman Point, nearby locations such as Cuffe Parade and Colaba are privy to some of the most prime residential real estate in the city.
High Vacancy Levels: The CBD is now witnessing an increase in vacancy levels due to the continued migration of corporates towards the extended and emerging CBDs.
Key Commercial Developers: Some of the key developers present in the CBD are the Raheja Group, the Mittals and the Maker group.
The Shift from the Brick Buildings of Nariman Point to the Glass Facade Buildings of Bandra Kurla Complex as Alternate CBD
A large number of companies operating in India have their head office in and around Nariman Point. However due to various reasons, in the recent past, there is a paradigm shift with many companies looking towards other upcoming alternate locations such as BKC & Lower Parel.
Besides older building & narrow roads, another disadvantage of Nariman point emanates from the sea that flanks the location from three sides. This CBD was developed on a strip of land which is a part of reclaimed belt from the sea. With no scope of expansion, most corporates were eventually prevailed upon to launch distributed offices in various other parts of the city. This led the Government to eventually recognize the need & decongest Nariman Point and propose alternative Central Business Districts (CBDs).
The primary among this was Bandra Kurla Complex (BKC), which had an edge over other proposed sites because of its strategic location between the airport and Nariman Point. As Mumbai is a linear city, BKC lies closer to the heart of the city geographically, compared to the older CBD of Nariman Point which lies at the southernmost tip of the city. The rentals in BKC range between INR 200-300/sq.ft. In contrast rentals in Nariman Point ranges from INR 150-300/ sq. ft.
A combination of factors played a role in driving companies towards BKC and other suburban hubs from Nariman Point
- There is no good quality large spaces available in the area such as Nariman Point as companies are looking at large spaces now a days, like 30,000 to 40,000 square feet, with amenities such as ample parking space, food courts, and gymnasiums. This kind of space isn’t available at Nariman Point.
- BKC provides excellent connectivity to entire Mumbai suburban areas and it is much closer to residential catchment areas also. The BKC is connected to the Bandra railway station on the Western railway line and Kurla railway station on the central railway line, which reduces the train travel time by 25-30 minutes. Moreover, Mumbai domestic and international airports are located much closer to the BKC.
- BKC provides corporates with the contiguous space that Nariman Point, with its multiple ownership pattern, could never offer them. BKC can offer standalone buildings exclusively dedicated to one business. At Nariman Point, one generally gets staggered presence across floors in a multi-tenanted building
- Another reason companies have shifted from places in south Mumbai is safety, which is high on the priority list of MNCs and big Indian businesses. Most buildings in the area are more than 30 years old. On the other hand, of the 29 buildings in Mumbai that have received any kind of Leadership in Energy and Environmental Design ratings, an urban design standard; BKC has seven, all of them with either gold or platinum ratings. It means these buildings score highly in energy efficiency, water efficiency and have better indoor environmental quality.
Better Management: Being a more structured development the emerging CBD is more organized in terms of town planning. Important facilities like abundant parking, broad roads, abundant power supply to name a few, has been sufficiently taken care of at BKC.
Accessibility: Better and well-planned roads have added to the easier accessibility of BKC. The Bandra-Worli Sea Link has eased the traffic flow from North to South Mumbai and reduced travel time between Bandra and Worli from 60 mins to 7 mins. The Santa Cruz-Chembur Link Road has enhance connectivity between the Western and Central suburbs.
Architectural and Aesthetic Designs: The passage of time has seen the emergence of new age architecture gracing the skylines of the emerging CBD. Earlier when the South Mumbai CBD was evolving, not much emphasis was paid to the exteriors of the building. But over the recent years, the outlook of corporate clients has changed. Most of these corporates boast of an international clientele and a well-designed building that makes the client feel at home.
Key Commercial Developers: The key commercial developers present here are the Maker group, Wadhwa, Rahejas, Parinee, Maker, TCG and the Naman group.
The Extension of Central Business District
The extended CBD of Mumbai essentially comprises of Worli, Prabhadevi and Lower Parel. This area has seen a lot of transformation in the quality of real estate. From being largely old world mill areas, these micro markets are fast transforming into quality office and retail spaces. Proximity to high end residential apartments & retail malls has also led to the growth in demand in these areas. The accessibility of these locations however, is lower than the accessibility of the CBD as the surrounding infrastructure does not support the commercial presence. Often there are water logging issues in these areas during the monsoons. The current rentals for Lower Parel and Mahalaxmi ranges between INR 120-160/sq.ft.
Accessibility: The Lower Parel region is closer to residential catchments compared with the CBD of Nariman Point. Its accessibility however, is lower than the accessibility of the CBD as the surrounding infrastructure does not support the commercial presence. Often there are water logging issues in these areas during the monsoons.
Supply of commercial space: While maximum commercial supply is available at Lower Parel, there are few new options for corporates at Mahalakshmi, Worli and Prabhadevi.
High End Residential Supply: Mahalakshmi Race Course and Lower Parel are witnessing the growth of high end residential complexes as well.
Key Commercial Developers: Some of the key commercial developers present here are the Peninsula group, Lodha, Marathon, Urmik, Kamala and Indiabulls.
Emerging Secondary Business Districts
Due to supply constraints and high price points in the CBDs and Extended CBDs, the secondary business districts of Andheri-Kurla, SEEPZ, Powai and Vikhroli have seen good transactions volumes in the commercial markets. The SBD micro-markets provide good connectivity from the Central/Harbour and Western suburbs. Andheri East commands rentals in the range of INR 100-140/sq.ft., while Andheri West starts at a slightly higher base of INR 100/sq.ft. Powai is currently commanding rentals between INR 100-120/sq.ft. while Vikhroli, KanjurMarg and Vidyavihar are at INR 60-70/sq.ft.
Tenant Profile: The Andheri Kurla stretch has been a hub of manufacturing, professional services and logistics due to its central location and proximity to the airport. High demand from companies like Consultancies, Airlines, Non-BFSI professional services are the growth drivers for this micro-market. The Santacruz Electronic Export Processing Zone (SEEPZ) offers excellent facilities to IT firms. The major driver at SEEPZ is the accessibility to both central and western line. In fact, the stretch is a mix of clients from various profiles. Powai too has emerged as an IT/ITES destination.
Rental Trends: The entire secondary business district can be divided into three zones in terms of rental trends. Areas along the Western Express Highway command a premium in rentals, compared with areas along the Andheri-Kurla road which are second in terms of preference. The areas beyond Powai comprise the third segment where rentals are the lowest as they are furthest from the Western Express Highway.
Upcoming Infrastructure: The upcoming Metro Rail between Versova-Ghatkopar will improve connectivity between the Western and Eastern suburbs.
Small Office Spaces Present: A number of small office spaces are available in these micro markets which are being taken up by SMEs, Consultants, Chartered Accountants and Advocates.
Key Commercial Developers: Some of the key commercial developers present here are the Rahejas, Kanakias, Peninsula, Phoenix, Neelkanth, Rustomjee, Godrej, HCG, Kohinoor, Nepture, Hiranandani and Kalpataru.
The Rise of Peripheral Business Districts
Thane, Airoli, Vashi and Ghansoli form the Peripheral Business Districts scattered around the suburban areas of Mumbai are also emerging as powerful business districts in the Mumbai region. These areas provide some of the good quality IT/ ITES commercial office spaces. Besides, Navi Mumbai also has City & Industrial Development Corporation (CIDCO) as an organization to promote setups in Navi Mumbai by offering various incentives (Capital subsidies, Interest subsidies etc.) With over-congestion prevailing within the city and the suburbs, the Peripheral Business District has emerged as an answer to good quality spaces with large floor plates. Rentals in the Airoli markets are ranging between INR 35-45/sq.ft., in Thane between INR 65-75/sq.ft. and in Vashi the range is between INR 60-90/sq.ft.
Accessibility: Well planned and connected wide roads are one of major growth stimulators for these peripheral locations.
High Retail and Commercial Development: As the peripheral business district Thane witnessed good retail and commercial developments with commercial offices in the outskirts of city areas like Wagle Estate, Pokhran road No. 1, 2 and Ghodbunder Road. Manufacturing and industrial units have now given way to significant retail, residential and commercial developments.
Large Floor Plates: The floor plates available for commercial office spaces are much larger than those available in the Western and Southern parts of Mumbai.
Key Commercial Developers: Some of the key developers present here are Wadhwa, Lodha, Nitco, Dosti, Kesar and the Raheja group.