India's Supreme Court has given the go-ahead for the commercial development of contested prime land in Bombay. The long-awaited ruling is expected to trigger a real-estate boom in the country's financial capital and encourage global property developers who want to enter the Indian market.
A legal tussle over 240 hectares of land in the heart of Bombay ended last week when India's Supreme Court allowed property companies to go ahead with commercial and residential developments.
The textile mills that occupy the central Bombay sites shut down nearly three-decades ago. But since then the future of some of the most expensive chunks of real estate in the world has been hotly debated.
Environmentalists wanted to use the land to create green spaces and low-cost housing in a crowded city where millions live in slums. Private real-estate companies wanted it freed up for development.
Real-estate companies who bought parcels of land last year at record-breaking prices say they will now regenerate the area to create world-class housing, offices, and shopping complexes.
Kekoo Kolah, executive director in India of Real Estate consulting group Knight Frank, says the recent ruling will help to meet the surging demand for space in a city starved of new property.
"If you take five to six years, from the real-estate sector perspective, Bombay has, in a way, been losing out to places like the Northern Capital Region, Hyderabad, Bangalore, Chennai," Kolah said. "That is something that no people in Bombay and the state government does wish to reverse, because of almost artificially created shortages, which were forcing people out."
The ruling is also expected to benefit foreign property funds, which have been waiting for an investment opportunity in India since rules were eased last year to allow foreign finance in the real estate sector.
The funds are attracted by a country where the economy is growing rapidly, but where almost every type of building is in short supply.
But investors are also wary of the red tape and legal wrangles that can accompany real estate projects in India.
Kolah at Knight Frank says the Supreme Court ruling may help ease some of these concerns.
"... In the last 12 to 18 months ... we have been talking to at least anything from 75 to 100 foreign developers, investors, serious global players who are looking at entering the Indian market, not necessarily only Bombay... For them this is certainly salutary, because it adds that stability and clarity so that now people can, ... within the law of the land, put forth their projects and hope to get the clearances as they would in any other country," Kolah said.
Foreign capital is already entering India's real estate market. Morgan Stanley recently announced it is investing 68-million dollars in a real estate developer in Bangalore and other private equity companies have similar plans.