The fact that Mumbai has once again been targeted by terrorists begs the question – what are the immediate and long-term implications of this continued focus by disruptive forces on the city? More specifically, how does Mumbai’s status as the bullseye that various terrorist factions seem to aim for affect businesses such as the real estate market?
There are no simple, catch-all answers. Historically, cities were in fact a very secure configuration of human settlement, since they had the advantage of strength of numbers and were usually protected by high walls. This is no longer the case, and Mumbai is in fact one of the most unprotected cities in the country. Also, it should be noted that Mumbai is a highly diversified city. Largely because of the legendary commuting issues and infrastructure challenges, it does not function as a unit but rather as a collection of mini-agglomerations. The central parts of the Island City link to the immediate and extended suburbs, but each area has its own demographic typology and socio-economic DNA. It is therefore impractical to speak of Mumbai as a cohesive city which is equally affected in all its constituencies by such incidents.
South and Central Mumbai seem to the be preferred targets for terrorist attacks. This is doubtlessly because the population density is highest in these areas, and also because they have the highest economic significance. Moreover, they are the epicentres of iconic buildings. Sweeping, long-term security measures anywhere but in individual buildings are extremely difficult to implement because of the crowding and incessant business activity which suffuses every stratum in these areas – from corporate boardrooms to the streets. For all these reasons, South and Central Mumbai will always be the most vulnerable locations in Mumbai.
Mumbai is doubtlessly an unmatched powerhouse of economic activity that generates enormous capital and a huge number of jobs. It is impossible to talk of India as a growing economy without picturing Mumbai’s iconic skyline and the incessant buzz of activity in the country’s financial capital. The demand for commercial and residential property in this city can scarcely be matched by any other metropolis in the world.
Unfortunately, the high population density, the presence of extremely valuable landmark buildings and infrastructure projects critical to the continued functioning of the city make it a target-rich environment for terrorists. Its geographically exposed nature, the large population, mounting traffic challenges and the constant movement of goods into and out of the city make the implementation of adequate security measures a huge challenge.
It can also not be disputed that Mumbai has a high symbolic value for terrorist outfits. Apart from creating the maximum possible damage in terms of property and human life, a terrorist strike in this city gets immediate global attention.
How does all this affect the real estate market in Mumbai? Demand for office space in and around the most vulnerable buildings and locations is usually impacted for a period. Not surprisingly, this period is usually short – and despite their apparent vulnerability, areas such as Nariman Point and BKC see no discernible drop in occupancy. This has more to do with the inalienable business value of these locations rather than the so-called ‘indomitable spirit’ of the city. Also, these areas have the highest security levels for commercial establishments in Mumbai.
There is usually a more protracted drop in demand for office spaces in areas like Andheri and Bandra, largely because of the fact that these areas also residential catchments for the mid-income segment. Nevertheless, the demand invariably returns to normal once the initial scare is over. Mumbai is all about business – this is its primary strength, and also the reason why it manages to bounce back from seemingly overwhelming setbacks.
Residential real estate itself presents a somewhat different picture. After every terrorist incident in the city, there is a noticeable increase in demand for homes in the suburbs, since these are correctly perceived to be less prone to such attacks. Existing price pressures in the more central regions only add to this gradual exodus. In fact, this is true for commercial real estate as well.
It is a known fact that terrorist attacks decrease the advantages of locations on or near likely targets of attacks. It has been noted in other cities affected by terrorist attacks – most notably London and New York – that such incidents are usually followed by a dispersal of people, jobs, and office activities from high-rise CBD structures to smaller suburban structures and from large to small metropolitan areas will follow.
As a result, these suburbs are growing in population, economic activity and overall significance. It can only be hoped that higher awareness, better planning and superior infrastructure will prevent them from becoming targets of the future.
