Mumbai: Prices of land, which are used for development of residential projects in Mumbai, have appreciated by almost 35.2 percent over the last two years mainly due to change in norms and increase in property prices, a recent survey said.
A survey conducted by Knight Frank of 13 top Asian cities on the parameters of prices of land used for residential and commercial projects, pointed out that Mumbai is an expensive market compared to Delhi NCR and Bangalore, which have been studied in the report.
According to the report, Mumbai's residential development land prices appreciated by 35.2 percent in the last two years, while those of Bangalore grew by 26.1 percent and Delhi NCR by 24.9 percent.
However, in terms of office space development, land prices fell by 13.1 percent, even as Delhi NCR and Bangalore registered a growth of 16.3 percent and 12.9 percent, respectively.
"Change in development norms coupled with increase in residential prices resulted in an increase in prices for land used for residential development in Mumbai. However, a fall in office space absorption combined with large quantum of supply led to a decline in the office development land index," the report said.
The report noted that prime residential development land index for NCR witnessed an appreciation of 24.9 percent owing to the increase in prime property prices and steady demand.
Emerging markets of Gurgaon illustrate a much higher rise in prime office land values compared to the established markets of Connaught Place and Saket, it said.
In case of Bangalore, increase in property prices and demand for housing due to steady job growth enabled residential land prices to grow 26.1 percent. Similarly, increase in demand from the IT/ITeS sectors pushed office development land prices.
"While Mumbai witnessed maximum appreciation compared to National Capital Region and Bangalore in residential land prices, it emerged as the worst performer in the office space front," Knight Frank Chief Economist and Director ? Research Samantak Das said.
Land prices in Mumbai are likely to continue to grow in the coming future mainly because of its limited availability, poor quality infrastructure and regulatory constraints, that have severely restricted creation of new housing stock, resulting in an ever widening demand supply gap and consequent increase in-built property prices.