Why are residential properties in Mumbai so expensive?

Q: What are the factors that have been driving Mumbai's real estate prices so high over the years?

Amreesh Murugan,

2nd November 2015

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Replies (4)

Yes, in Mumbai, the real estate prices are growing day by day and people are in search of luxurious flats with all the modern amenities. As inflation has reached a great hike, residential property rates will also increase.

Lntrealty, Mumbai

10th September 2019

Comment

Thanks Arushisha and Vasanth,
I got very reasonable answer from both of you. Apart from supply-side factors which are all the factors effected by buyers?

Pranab Malakar,

2nd November 2015

Comment

Well Pranab,
Demand side is equally responsible for high property rate in Mumbai. High investor activity always plays a big role in driving up real estate prices, and Non-Resident Indian investors comprise a significant volume of residential real estate buyers in Mumbai, since it offers better returns for property investment when compared to cities in their countries of residence.

Mansoor Bithal, Mumbai

3rd November 2015

Yes, you can say. Another reason for high demand from NRIs is that Mumbai offers a standard of living that can match what they have grown accustomed to in developed countries.

Indian developers are constantly requesting NRI and PIO investors in their countries, and many even have permanent offices there for this purpose. Often, as much as half of their inventory is sold to such investors even before local brokers find out the launch.

Vasanth,

4th November 2015

Hi guys,
Can you tell me how supply-side factors responsible for Mumbai's real estate prices?

Pranab Malakar,

2nd November 2015

Comment

Hi Pranab,
Geography, Government policies, Locked Land and Slow Infrastructure Deployment are the primary factors responsible for Mumbai's real estate market.

Mumbai is surrounded by water on 3-sides, as a result, Mumbai has never seen circular development like most other Indian cities. Development was always one-directional from the South towards the Northern suburbs..

Arushisha, Mumbai

2nd November 2015

I agree with that because, most of the infrastructure development happened in South and North part of the Mumbai compare to East and West side.

A combination of factors such as 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 such as Prime North (Bandra-Juhu) and South Central (Byculla-Chembur).

Vasanth,

2nd November 2015

@Vasanth,
At the same time, the slow progress on infrastructure has not allowed the city authorities to open up new land parcels for development. Major projects such as the Mumbai Trans-Harbour Link (MTHL), coastal road network, the Navi Mumbai international airport, various phases of the proposed Metro links, etc. have made very slow progress in decongesting the city. As a result, end-users still prefer living in established localities where they have access to necessary transport infrastructure and ignore the upcoming locations which do not offer this benefit.

Arushisha, Mumbai

2nd November 2015

Hi Amreesh,
According to me, ready reckoner rates can be one of the responsible factors. Because in the recent years of 2013-2015, the Maharashtra government has been increasing ready reckoner rates by 15-20% across the city.

Pranab Malakar,

2nd November 2015

Comment

Yes, Mumbai's real estate prices are never out of the news. From the sale of expensive properties in South Mumbai to the ever-widening affordability gap for middle class home seekers, the city's residential real estate market is under a constant limelight.

To understand its depth, one needs to examine it from the two primary real estate factors of demand and supply.

Puneet Laskar,

2nd November 2015