MUMBAI: Sumitomo Realty and Development, Japan’s third-largest developer, is set to expand its operations in India with a unique approach: focusing on Mumbai and managing apartments instead of selling them, executives told Reuters.
Japanese developers are increasing their footprint in India’s $300 billion real estate market, drawn by rising rents and significantly lower construction costs than in Tokyo, New York, or London.
Companies like Mitsui Fudosan and U.S.-based Blackstone have been expanding across India through partnerships with local developers or acquiring completed buildings, in light of slow land acquisition processes. In contrast, Sumitomo is focusing on Mumbai and opting for ground-up construction.
“Mumbai has assets and vitality that are on par with Tokyo,” stated Niinomi Masato, general manager of Sumitomo’s India division, in an interview.
Sumitomo has characterized Mumbai as its “second growth engine” following Tokyo, where it manages 240 buildings. Masato noted that Mumbai has fewer geographic risks, such as earthquakes, that could impact assets and cash flow.
Main Focus on Mumbai
Tomoki Iwata, managing director of Sumitomo’s Indian branch Goisu Realty, mentioned that while the company is assessing opportunities in other cities, suitable sites in Delhi, Bengaluru, or Chennai have yet to be discovered.
Sumitomo finds a more robust supply of prime locations in those cities compared to Mumbai, where a land shortage presents opportunities for long-term rental growth.
Sumitomo is engaged in developing five projects in India, all located in Mumbai, including four in the Bandra Kurla Complex, which is near the international airport and hosts numerous global firms.
Iwata stated that these four projects are expected to be completed within five years, with cash flows anticipated to support future expansions. He disclosed that Sumitomo has already invested a quarter of its planned $6.5 billion investment in India but did not provide specific details.
Focus on Management Over Sales
As luxury home sales in India soar, driven by rising wealth, rents for high-end apartments have also increased. This year, average rents in South Mumbai reached up to ₹730,000 ($8,096) per month, a 20% increase from three years ago, according to real estate firm Cushman & Wakefield. Local developers like Oberoi Realty and Godrej Properties typically sell luxury homes for millions.
“We don’t believe in merely following the crowd,” Masato asserted, adding that Sumitomo plans to manage and rent apartments instead of selling them at one of its “super-high-rise” projects in Mumbai.
