Why is Navi Mumbai real estate so expensive? Or is it correctly priced? Well answers are difficult to get. A decent 2 bedroom apartment costs upward of @Rs One crore.
Even for a professional who has a nice starting salary of say Rs. 500,000 gross income (per annum) the cost of a flat is about 20 years’ pay! that too at the gross. If you include the interest amount (housing loans do not come cheap, do they?) it just doubles to 40 years’ pay. Now if you assume that the IT sector and the Financial services sector will keep creating jobs at the entry level for the next ‘n’ no. of years…this boom can continue. Such jobs will not get created for more than a few years.
Mumbai’s famous infrastructure is almost a joke. Trains are over crowded – people are packed like sardines. Traffic moves ever so slowly and one party can decide which movie should be released. Power is available in the city @ Rs. 9 a unit and the suburbs have a 3-4 hour power cut. The idiotic real estate prices have skewed the price of school education – no school can hope to come up in the city. New shops find it difficult to make money paying such high prices.
Now if Mr. Thackrey decides that north Indians are not wanted (in 1967 he did not want south Indians), and in 2013 decides that everybody named Khan should not be in Mumbai (not sure what he can do next – he might ban women for all you know!!). If lower end jobs can be created far away from Mumbai, people will.
Now unconnected to all this Mr. Narendra Modi is creating something called ‘GIFT’ – which makes power available at say Rs. 3 a unit (gas based power can be cheaper for wholesale users for sure), create infrastructure at Rs. 2000 a sq. ft. (buying not renting!!) 40 kms from Ahmedabad will people go? Look at the financial services sector – Mr. Parekh (Hdfc), Mr. Hemendra Kothari (Dsp), Mr. Kampani (JM Financial), Mr. Uday Kotak (Kotak Group), Mr. Rashesh Shah (Edelweiss) – if all these people decide to shift the back office from Malad /Goregaon to Ahmedabad what happens? Suddenly you will see a million jobs being created in Gujarat.
If all these things happen successfully (to me it is a given that it will happen) why should Mumbai prices be held high. Funnily Mumbai prices are held high by doing a comparison.
Why are prices in Panvel at Rs. 3500 psf? Because Vashi is at 7000. Why is Vashi at Rs. 7000? Because Ghatkopar is at Rs. 11,000. Ghatkopar is at Rs. 11k because Santacruz is at Rs. 17000!! The whole thing is laughable – but there is money to be made :). So all builders, financers, investors, traders are all playing the market. Make no mistake if you bought Panvel at Rs. 2200 just 4 months back and currently are seeing it at Rs. 3000 YOU HAVE MADE MONey..no doubt. Stop thinking of it as NEVER ending game.
When the music stops, if you are holding the parcel, you get the punishment. Remember passing the parcel you played in school?
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