Wondering why Mumbai real estate is so costly?
mumbai real estate
Mumbai’s real estate has always been in the limelight, be it expensive trophy properties in South Mumbai or basic 1 bedroom-hall-kitchen apartments in the suburbs. The country’s commercial capital is branded as the hub of expensive residential properties.
If you are wondering what makes homes in Mumbai so costly, Anuj Puri, Chairman & Country Head of JLL India has the answers. “Mumbai’s geography, government policies and heavy-inward migration makes property prices soar. “ Puri further adds that Mumbai’s geography allows only linear development whereas other cities have circular development. The city’s real estate therefore, has the scope of growing only from South towards North.
Factors like distance from the Prime South city centres to the suburbs coupled with lack of robust infrastructure connecting these places has led to prices surging in the Prime city centres and the immediate peripheries. According to Puri, another reason for costlier property is the government policies, with regards to its ready reckoner rates. In 2013-2015 itself, the Maharashtra government has increased ready reckoner rates by 15-20 percent across the city while in Gurgaon the rates were increased only about 10 – 12 % during the same period.
Slow infrastructural development has not allowed the city authorities to open up new land parcels. Moreover, major projects that can help in decongesting the city like the Mumbai Trans-Harbour Link (MTHL), coastal road network, the Navi Mumbai international airport & the various Metro links are struggling for completion.
In addition, high investor activity drives real estate prices immensely, and Non-Resident Indian investors comprise a significant chunk of residential real estate buyers in Mumbai. While most educated and skilled Indians choose to migrate to first world countries, the relatively low skilled see Mumbai as the best option even though the cost of living is high & the quality of life poor. This constant need-based migration encourages landlords to hold on to high prices.
In conclusion, Puri feels that the developers are well aware of the fundamentals that drive demand for homes in the city allowing them to keep residential prices so high. Nevertheless, these reasons drive property sales and will continue to do so in the future also.
