Sky City: An easy run for Oberoi that will get tougher


The trick to understanding the operation of a developer is to never ask the developer. Given the stakeholders and linkages involved in housing, interactions with the ancillary sectors are far more illuminating. And if there is one player in Mumbai that vendors, suppliers and contractors have enormous praise for – it is Oberoi Realty. His uncompromising eye on the product and the process in construction puts him in a different league. Each and every project of the company stands out in a manner that is unparalleled in the respective micro-market. Thus, I am not surprised with the almost Elon Musk type fandom that has been generated for its promoter Vikas Oberoi.

When I announced that I had visited Oberoi’s Sky City project at Borivali on social media, it generated an interest for a project review that few other projects had elicited. The project was launched in October 2015 with revenues targeted of close to INR 10,000 crore. A year earlier Oberoi Realty had acquired the 25-acre land parcel from Tata Steel for INR 1,155 crore.

VISIT

I walked into the site at 11AM in the morning and unsurprisingly I was the first prospective buyer that day to have made an entry into the site. The first thing that struck me was that there no was sales desperation in the air. Given how accustomed I am to seeing a mad scramble by sales staff on entering a project site, the relaxed approach in Sky City itself was a refreshing feel. There are five towers under development currently – A to E with a mammoth 62 floors. In comparison its Splendour at Andheri is 27, Exquisite at Goregaon is 50 and Springs is 35 storeys. True to Oberoi’s strategy so far, there is no room for a budget offering in any of them. It all starts with a 3BHK. It also includes a dual key option in the 4BHK which includes a studio of 252 sqft – done through two agreements. It’s not uncommon in the Western world but is yet to be tested in the Indian context.

The amenities are pretty much on par with some of its other projects. There is an upcoming mall, hotel and a proposed Metro station on the anvil.

It is the sample apartment where the design and finesse shows up of Sky City. Optimal utilization of space with efficiency on columns. Most apartments in Mumbai look and feel smaller than they really are which is why we see customers often ask questions like “Are you sure this is 750 square feet?” In the case of Sky City – one can feel the opposite. I felt it almost immediately as I visited another project after Sky City. And while the flat size of both the projects was almost the same, it was clear that the Sky City apartment appeared larger.

Price: For a 1,093 square feet apartment at the 52nd floor in the A wing, I was given a total all-in price of INR 3.84 crore. The pricing includes a steep floor rise of 150 / square feet.

PROJECT STATUS: Given the advanced stage of construction, 80% of that amount would have been due to be paid. I know it’s been a while since the project has been launched but for the price point it quotes customers it must be said that Sky City has done reasonably fine. It had a bumper launch when it sold 619 apartments in the first quarter of launch in December 2015 (FY16). Thereafter it has averaged sales of 34 units every quarter. Today its sales tally has reached 1,271 units. There are 563 units of inventory in Sky City at the end of September 30th. Details are not clear but it is likely 3 more towers will be added to the existing 5 that are being constructed. The stamp duty cut will probably make Q3 and Q4, 2021 a bumper quarter for the project.

What I liked

  • Superior design and emphasis on the product
  • Show flat was outstanding
  • Integrated project development
  • Proximity to the Western Express Highway + Proposed Metro connectivity
  • Payment plan that was construction linked as well as developer subvention
  • Relaxed approach of sales staff towards a prospective customer

What I didn’t like

  • Price is a well off-the-market
  • Few companies and brands in real estate offer their sales staff the material that Oberoi offers to make a memorable pitch. In that regard, I was disappointed by the lackluster sales pitch

CONCLUSION: Sky City is a fine project at the typical Oberoisque premium. It works largely because, truth be told, Sky City doesn’t have much meaningful competition in that market – unlike the struggling Eternia and Enigma in Mulund. Hence a quality-inflexible and budget-flexible customer should consider Sky City. Given the volumes being packed into the project at the premium pricing, I however suspect absorption will be slow and challenged going forward. The problem for Oberoi is that inadvertently he has become a prisoner of his own brand. His offering should have been focused on quality and holding on to that high quality. Holding on to a fixed price should never have become as critical a symbol on testing the strength of his brand. Oberoi may not need it at Sky City yet – but closing that option is a risky bet.

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