Mumbai Real Estate: Rental Costs Exceeding Annual Income for Many
At an annual income of ₹5 lakh, renting a 1BHK in Mumbai requires an annual rental cost of ₹5.18 lakh, causing financial strain and a potential brain drain to more affordable cities.
Mumbai Real EstateRental CostsBrain DrainAffordable CitiesReal Estate DevelopersReal Estate MumbaiOct 18, 2024
The report highlights that the average annual rental cost for a 1 BHK apartment in Bengaluru and Delhi is around ₹2.32 lakh and ₹2.29 lakh, respectively. These costs are nearly half of what is required in Mumbai. The average annual salaries in these cities are ₹5.27 lakh and ₹4.29 lakh, respectively. The high rental costs in Mumbai negatively impact disposable income, making it difficult for residents to cover basic living expenses and other financial obligations.
Mid and senior-level employees in Mumbai also face significant financial strain due to the high rental costs. Mid-level employees, who typically rent 2 BHK apartments, earn an average salary of ₹15.07 lakh annually but spend about ₹7.5 lakh per year on rent. In comparison, mid-level employees in Bengaluru, earning ₹16.45 lakh annually, only spend ₹3.90 lakh on rent. Similarly, in Delhi-NCR, mid-level professionals earning ₹14.07 lakh annually spend ₹3.55 lakh on rent. This large disparity in rental costs leaves Mumbai employees with limited savings and less disposable income for essentials.
Senior-level employees, who usually rent 3 BHK apartments, also face similar challenges. In Mumbai, they earn an average salary of ₹33.95 lakh annually and spend ₹14.05 lakh on rent. In contrast, senior-level employees in Bengaluru, earning ₹35.35 lakh annually, spend ₹6.25 lakh on rent. In Delhi-NCR, senior employees earning ₹30.73 lakh annually spend ₹5.78 lakh on rent. The high rental costs in Mumbai are driving these professionals to seek better quality of life and higher disposable income in more affordable cities.
The report also mentions that the premium costs in Mumbai’s real estate market are extremely high. Developers in Mumbai pay an average of ₹54,221 as approval costs for developing 1 square meter of residential space. This is 25 times more than in Delhi-NCR, 50 times more than in Hyderabad, and 47 times more than in Bengaluru and Chennai. These high approval costs make housing projects unaffordable and reduce investments in real estate, pushing people to migrate to more affordable cities.
As of December 2022, Mumbai had over 1,671 ongoing projects, including major infrastructure projects like the metro rail, Trans Harbor Sea Link, and Coastal Road, which are expected to cost around ₹25,56 lakh crore. If Mumbai remains unaffordable, residents may choose to move to cities with better cost of living options, potentially underutilizing these large-scale projects.
Niranjan Hiranandani, of Hiranandani Developers, recently highlighted the financial burden on homebuyers in Mumbai. He noted that 50% of the cost of purchasing a house goes towards taxes, including GST, stamp duty, and FSI rate. This makes it nearly impossible to sell houses at affordable rates, further contributing to the housing affordability crisis in Mumbai.
Frequently Asked Questions
What is the average annual rental cost for a 1 BHK in Mumbai?
The average annual rental cost for a 1 BHK apartment in Mumbai is approximately ₹5.18 lakh.
How does the rental cost in Mumbai compare to other major cities like Bengaluru and Delhi?
The average annual rental cost for a 1 BHK in Bengaluru and Delhi is around ₹2.32 lakh and ₹2.29 lakh, respectively, which is nearly half of the cost in Mumbai.
What is the impact of high rental costs on mid and senior-level employees in Mumbai?
Mid and senior-level employees in Mumbai face significant financial strain as they spend a large portion of their salaries on rent, leaving little for savings and essentials.
What are the premium costs in Mumbai's real estate market compared to other cities?
Developers in Mumbai pay an average of ₹54,221 as approval costs for developing 1 square meter of residential space, which is 25 times more than in Delhi-NCR and 50 times more than in Hyderabad.
How do high approval costs affect the real estate market in Mumbai?
High approval costs make housing projects unaffordable and reduce investments in real estate, leading to a housing affordability crisis and pushing people to migrate to more affordable cities.
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