by Deepak Sawant 
Japan’s Sumitomo Realty & Development, the country’s third-largest developer, is making a bold strategic pivot in India by zeroing in on Mumbai for serviced apartments and rental housing.
Unlike many international companies that typically spread their investments across various cities, Sumitomo is focusing on Mumbai, where it sees the most potential. This shift is a notable development in how foreign investment is entering India’s real estate market.
Sumitomo has taken a unique approach by avoiding the usual method of buying and selling properties. Instead, they’re concentrating on serviced apartments and rental management. In total, the company is launching five new projects within Mumbai, with four of those located in Bandra Kurla Complex (BKC). This area is a key business hub close to the international airport and is home to many multinational companies. They expect these projects to be completed within the next five years, and the revenue generated will help finance future developments.
So, why did Sumitomo settle on Mumbai? Beyond just financial reasons, the company leaders see a lot of energy and potential in the city, comparable to Tokyo. They even consider Mumbai to be their second source of growth outside Japan, where they are already managing over 240 properties.
There are several practical reasons for their choice:
First, Mumbai is viewed as relatively stable in terms of natural disasters compared to other Indian cities like Delhi, which are at higher risk of earthquakes and similar events. This stability is vital for their long-term strategy.
Second, there’s a growing demand for rentals. In areas like South Mumbai, luxury rental prices have soared. Some high-end apartments are now renting for as much as ₹730,000 a month, which is a significant increase of about 20 percent from just three years ago.
Lastly, there’s a lack of available land in prime areas of Mumbai. This scarcity could lead to growth in rental opportunities, which is something Sumitomo aims to capitalize on with their carefully planned projects.
What really sets Sumitomo apart, though, is their strategy regarding property management. Instead of adopting the common practice of selling luxury homes, they plan to keep ownership of the units they develop. By managing and leasing out these properties, they align with trends seen in other mature global markets where rental portfolios create stable income over time.
This strategy is well-timed to tap into the increasing number of young professionals and corporate clients, particularly in business-centric areas like BKC, who are looking for quality rentals.
From a financial standpoint, Sumitomo has committed a huge investment of $6.5 billion in India, with about 25% already allocated to projects in Mumbai. This reflects a strong belief in the city’s future.(Business Standard)
As the global real estate scene continues to develop, Sumitomo’s focused investment in serviced apartments in Mumbai clearly shows the growing urban demand, premium pricing, and robust interest from international investors in India’s market.
