Sumitomo Realty and Development of Japan, the third-largest real estate developer in the country, is expanding its operations in India with a strategy that is different from most of its global peers. It is concentrating with great intensity on Mumbai and is more inclined to manage and rent out residential apartments rather than sell them outright.
This move is aligned with present trends , as foreign developers and institutional investors are progressively turning to India’s $300 billion real estate market, enticed by rising rental yields, continuous demand for luxury housing, and building costs that are still quite low compared to other major cities of the world such as Tokyo, New York, and London.
Executives overseeing Sumitomo’s India operations indicated that the company sees long-term value in retaining ownership of assets in Mumbai, allowing it to generate stable rental income while benefiting from capital appreciation in a supply-constrained market.
Mumbai seen as long-term growth engine
According to Niinomi Masato, who oversees Sumitomo’s India business division, Mumbai holds strategic importance for the group, comparable to Tokyo in terms of economic vitality, density of corporate activity, and long-term asset potential. He has previously described Mumbai as the company’s “second growth engine” after Japan’s capital.
Masato has also highlighted that, unlike several global cities, Mumbai faces fewer geographical risks such as earthquakes, which can threaten long-term asset values and disrupt cash flows. This, he believes, strengthens the case for holding and operating income-generating real estate in the city over extended periods.
Ground-up development over acquisitions
While many international developers and private equity firms have entered India by partnering with local players or acquiring completed office and residential assets—often to avoid complex land acquisition processes—Sumitomo is taking a different route.
Tomoki Iwata, Managing Director of Goisu Realty, Sumitomo’s Indian subsidiary, said the company is prioritising ground-up development rather than buying finished buildings. Although other Indian cities such as Delhi, Bengaluru and Chennai are being evaluated, the company has not yet found sites that meet its investment criteria.
Iwata explained that Mumbai’s chronic land scarcity, particularly in prime business districts, creates conditions for sustained rental growth over time. In contrast, he sees a relatively stronger supply of prime land in other metros, which could limit long-term yield expansion.
Five projects, all in Mumbai
Sumitomo has five projects in India which are all situated in Mumbai. Out of these, four are in the Bandra Kurla Complex (BKC), the central business district of the city located close to the international airport and housing a lot of multinational corporations, financial institutions and technology firms.
Iwata mentioned that these four projects are slated for completion within the next five years. He added that the money coming in from these projects will probably be used to finance the growth in India without the need for external capital.
The Japanese developer has committed $6.5 billion to India and has already deployed around a quarter of that amount, though it has not disclosed a detailed project-wise breakdown of the investment.
Renting instead of selling in a booming luxury market
Sumitomo's choice goes against the grain very much when India has been experiencing a substantial rise in luxury home sales primarily due to the increased wealth of high-net-worth individuals and their greater demand for luxury real estate. In parallel, the rental values for luxury apartments have also been increasing substantially.
The average monthly rents in south Mumbai have risen to as much as 7.3 lakh this year, making an increase of nearly 20% over the past three years, according to data from Cushman & Wakefield.
While Indian developers like Oberoi Realty and Godrej Properties usually make the most of luxury housing by selling the units at very high price levels, Sumitomo has decided to keep the ownership and rent the apartments, including one in its planned super-high-rise, where the company is leasing the apartments.
Masato said that the company does not believe in doing the same thing, i.e., sales-led model, which is the prevailing model in India, and instead it thinks that a long-term asset management approach that is compatible with its global strategy is more appropriate.
This is part of a bigger foreign interest in India
Along with global investors like Blackstone, Japanese developers like Mitsui Fudosan have gradually increased their investment in Indian real estate because of good demographics, the rising demand for office spaces, and more transparency in the regulatory environment.
Sumitomo’s strategy, which is focused on Mumbai and rentals only, is a clear indication of the trust the company has in the Indian market to provide stable real estate with long-term rentals, especially in the premium urban micro-markets where the supply is still limited.
By placing a bet on Mumbai, Sumitomo is showing that global developers are progressively considering Mumbai not only as a place where they can develop new projects but also as a city that can accommodate rental housing for institutional investors on a large scale. This is how the commercial capital of India can continue to attract multinational companies and highly-paid professionals.
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