Uday Kotak in awe after New York commercial property price cut puts rate at half of Mumbai’s BKC

Industrialist Uday Kotak expressed his surprise over the rate cut for a Manhattan property that left the price at less than half of what is demanded in Mumbai's business area of BKC.

In a post on social media platform X (formerly known as Twitter) on March 17, Kotak responded to user Nilesh Shah's (@NileshShah68) post converting the USD real estate sale to Indian Rupees. "New York commercial office building going at ₹~ 16000 per Sq Ft." wrote Shah.

To this, Kotak responded with: “Wow Nilesh. That's less than half the rate at Mumbai's BKC!”

Manhattan commercial estate sold at 70% markdown

In a post on March 16, X user Triple Net Investor (@TripleNetInvest) wrote that a Manhattan office tower had sold at a "shocking" 70 percent discount compared to its last sale. "The 778k sq ft tower at 222 Broadway sold for $150 million. The building last sold for $500 million back in 2014," they informed.

The user also noted the significance of this property rate cut. "Even NYC is seeing massive distress and destruction in values for prime commercial real estate office buildings," they added.

Housing Affordability in India a Big Question

The Knight Frank Global House Price Index for the third quarter of 2023 ranked India 14th globally, up 18 positions from the previous year, with an average 5.9 percent increase in house prices over 12 months.

Further, as per a housing prices index maintained by Srini Raju Centre for IT and the Networked Economy at the Indian School of Business, the 12-month period ended September 2023 saw the biggest annual jump across one-BHK, two-BHK and three-BHK houses over the last six years. The biggest rise, of 7.3 percent, was in the two-BHK segment.

Meanwhile, property consulting firm Anarock found that the share of affordable housing (less than ₹40 lakh) in new supplies has been shrinking in the top seven cities, from 24 percent in Q3FY21 to 18 percent in Q3FY23. In Q3FY19, this segment accounted for 41 percent. This drop is driven by several factors, including higher land value and construction costs.

A government boost is seen as essential to reverse this decline. An Ipsos survey last year found that 65 percent of urban Indians who do not own homes fear they may never be able to afford one. Real estate prices vary from city to city, depending on local factors, including new supply, absorption and rentals. However, high-interest rates could moderate housing price inflation.