Navigating the Risks and Rewards of Mumbai Real Estate Redevelopment
Explore the potential benefits and hidden costs of upgrading from a modest 2BHK to a luxurious 3BHK through real estate redevelopment in Mumbai.
Mumbai Real EstateApartment RedevelopmentProperty Value IncreaseBuilding Maintenance CostsRedevelopment RisksReal Estate MumbaiDec 23, 2025
It must not be resisted. It, however, must be evaluated and handled carefully. The builder may have upgraded you from a Maruti Swift to a Mercedes. But the cost of operating a Mercedes is substantially higher than that of living with a Maruti – from the mileage to the spare parts. Similarly, there is a sharp cost difference to run a small apartment in a standalone old building with no amenities versus a big apartment in a stylised tower with various amenities.
Welcome to the most under-rated element in redevelopment: Maintenance. In old buildings, it is hardly a factor. The entire experience for an owner largely comprises an apartment and an elevator. Car parking was a luxury confined only to a limited number of homeowners. In newer buildings, these are mere basics. The show really belongs in factors like the glossy lobby or the soothing swimming pool. A person buying an apartment at today’s prices probably has the budget to sustain the steep maintenance bills.
With old apartment owners who have got the new property at no cost, there could be a challenge if their incomes have not risen to sustain the newly provided lifestyle. Maintenance bills now commonly range between Rs 10/sqft to Rs 20/sqft on carpet area. An apartment owner who previously paid Rs 2,500 per month as maintenance for his old 500-square feet home now must pay Rs 10,000 to Rs 20,000 for his new 1,000-square feet home. It is slow pain that hurts every time it is paid.
Previously, builders played an active role in ensuring the maintenance bill was taken care of by providing a lump sum corpus amount as part of the redevelopment deal. That amount could be invested and the returns from that would pay off the monthly maintenance bill. Unfortunately, most apartment owners view that amount as capital to be invested in purchasing another asset rather than as capital to be utilised for sustaining the core asset.
The consequences are negative for all stakeholders. Given that most redevelopment in Mumbai is on small plots, a common building houses the old apartment owners as well as the new apartment owners. They may own homes in the same building, but often they don’t belong in the same financial league.
Conflict is inevitable. One wants the varied services and has a liberal wallet for it, while the other wants to open the wallet very carefully. Either the maintenance of the new building suffers or the old apartment owners slowly sell their units and relocate to projects or locations that are more compatible with their incomes.
The super-wealthy already know these dynamics. That’s the reason why apartments in a building that are built on vacant land without any old owners are priced higher than apartments in buildings that come up via redevelopment.
The solution to this dilemma has to come from not the builder or the new home buyer but the old apartment owner. They have two options. 1) They approve a project designed in a manner where the maintenance bill is not out of their reach. That means not getting swayed by the optics and glamour of trendy amenities and services but focussing on the basics. 2) They must go back to viewing redevelopment for what it was intended to be: An upgraded lifestyle, not a bonanza. That means using the funds judiciously in sustaining the new lifestyle rather than in acquisition of new assets.
After all, there is little point in owning a Mercedes if you can’t afford to run it.
Frequently Asked Questions
What is redevelopment in real estate?
Redevelopment in real estate refers to the process of tearing down old buildings and constructing new, often more modern and luxurious, structures. This can significantly increase the property value and offer better amenities to the residents.
What are the potential benefits of redevelopment?
The potential benefits of redevelopment include a significant increase in property value, access to modern amenities, and an overall upgrade in living standards. Owners often receive larger and more luxurious apartments as part of the redevelopment deal.
What are the hidden costs of redevelopment?
The hidden costs of redevelopment include higher maintenance bills, which can range from Rs 10/sqft to Rs 20/sqft, and the financial strain it can put on owners who are not prepared for the increased expenses. These costs can be a significant burden if not managed properly.
How can old apartment owners manage the increased maintenance costs?
Old apartment owners can manage increased maintenance costs by approving projects with manageable maintenance bills, focusing on essential amenities rather than luxury features, and using the funds from the redevelopment deal judiciously to sustain the new lifestyle.
What are the consequences of not managing maintenance costs properly?
The consequences of not managing maintenance costs properly can lead to financial strain, conflicts between old and new apartment owners, and a decline in the overall maintenance and quality of the building. This can ultimately affect the property value and living experience.
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