Mumbai Rent Costs Soar Compared to Other Metros: CREDAI-MCHI Report
The latest report from CREDAI-MCHI highlights a significant rise in rental costs and property values in Mumbai, outpacing other major Indian cities such as Bengaluru, Delhi-NCR, Hyderabad, and Chennai.
Mumbai Rental CostsProperty ValuesCredaimchiIndian MetrosReal Estate DevelopmentReal Estate MumbaiOct 23, 2024
According to the report, the average monthly rent for a 1BHK apartment in Mumbai now stands at Rs 43,138, nearly double the Rs 19,228 recorded in Bengaluru and Rs 19,058 in Delhi-NCR. Similarly, the cost of renting a 3BHK apartment in Mumbai has surged to Rs 1.15 lakh, compared to Rs 52,070 in Bengaluru and Rs 48,120 in Delhi-NCR.
President of CREDAI-MCHI, Domnic Romell, explained that the disparity between average salaries and rental costs in cities like Mumbai is influenced by a combination of factors. One of the key contributors is the substantial financial burden placed on real estate development due to high premiums and statutory charges. Developers in Mumbai face significantly higher costs compared to their counterparts in other cities. For instance, Mumbai collects 25 times more in premiums for residential projects than Delhi-NCR, and 50 times more than Hyderabad. These higher premiums directly impact the overall cost of construction and, consequently, property prices and rentals.
Romell added, 'Rather than viewing these disparities as fixed challenges, we believe there are opportunities to create a more balanced housing market through the rationalization of premiums and approval processes. By working collaboratively with various stakeholders, including developers, urban planners, and policy makers, there is potential to explore solutions that reduce costs while enhancing housing affordability. Streamlining statutory approvals and providing incentives for sustainable development projects can contribute to reducing the financial pressures on developers, ultimately leading to more affordable housing options for residents.'
Co-Founder of PropFina, Nitin Singhal, noted that the inter-connection between sectoral cycles and real estate is evident across India’s metros. The finance sector in Mumbai, the tech sector in Bengaluru, and government-business services in Delhi-NCR each shape not only the salary trends but also the type of housing demand. Real estate cycles, driven by these industries, reflect the current economic reality, impacting both affordability and quality of life for residents. As sectoral growth continues to evolve, the real estate landscape will need to adapt to maintain a balance between demand, affordability, and accessibility.
COO & Co-Founder of The Mentors Real Estate Advisory Pvt. Ltd, Deepak Nair, commented on the disparity as a reflection of several interconnected market dynamics, driven by factors such as regional demand-supply gaps, infrastructure development, job concentration, and cultural preferences. In Mumbai, the real estate market is highly competitive due to the city’s limited land availability, urban density, and demand from a thriving financial, media, and entertainment sector. Moreover, the migration influx, coupled with infrastructure expansion, sustains elevated rents.
Bengaluru, on the other hand, benefits from a more equitable real estate ecosystem. The city has seen continuous infrastructure expansion and a balanced supply of rental properties, which has helped maintain affordability even for junior and mid-level employees. In Delhi-NCR, despite being a major economic centre, rental rates remain more affordable due to a wider geographical spread, larger housing inventory, and the availability of alternate residential options in neighbouring areas like Noida and Gurugram.
Frequently Asked Questions
What is the average monthly rent for a 1BHK apartment in Mumbai?
The average monthly rent for a 1BHK apartment in Mumbai stands at Rs 43,138.
How much more expensive are 3BHK apartments in Mumbai compared to Bengaluru?
The cost of renting a 3BHK apartment in Mumbai is Rs 1.15 lakh, compared to Rs 52,070 in Bengaluru.
What are the key factors driving the high rental costs in Mumbai?
The key factors include high premiums and statutory charges, limited land availability, urban density, and strong demand from the financial, media, and entertainment sectors.
How does Bengaluru manage to keep rental costs more affordable?
Bengaluru benefits from continuous infrastructure expansion and a balanced supply of rental properties, which helps maintain affordability for residents.
What solutions are proposed to reduce the financial pressures on real estate developers in Mumbai?
Solutions include rationalizing premiums and approval processes, streamlining statutory approvals, and providing incentives for sustainable development projects.
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