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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  1. In other words for Mumbai based businesses or individuals resource allocation (directing resources to where they get the best return) is highly inefficient. Try telling that to the Mumbaikar….he will give you a incredulous look. No wonder, 1st generation immigrants grow their money the fastest and that leaves the Sena fretting & fuming!

  2. It is high time major businesses moved out of Mumbai to places like Ahmedabad, Bangalore, Hyderabad, Mysore etc. This will teach both Congress and Shiv Sena a very good lesson.

  3. ICICI is already moving its back office to Hyderabad. I suspect likes of HDFC, AXIS will follow soon.

    And yes, I have a feeling it the black economy that saw India through the crisis and keeping the real estate rates abnormally high.

  4. Sir, what you say makes some sense. But other tire-2 cities are worse than mumbai. Let me share an example, at nasik or aurangabad a house costing 30 Lakh will give rental income of 5000 per month. where as at mumbai a 60 lakh house will fetch 20000 per month as a rent. Again holding box in mumbai is better than holding it in the tire-2 cities.
    what do u say?

  5. Well written article. At mumbai apartment prices have gone beyond purchasing power.

    Because we need to have only 15% of the price at hand, every one wants to take part in the parcel passing game … and the game is not bad too .. out of 100 participants only one get caught when the music stops..

    A man who earns 15000 a month with 10% salary increase every year, will make 57 Lacs in 15 years,

    Salary Monthly Yearly
    Year 1 15,000 180000
    Year 2 16,500 198000
    Year 3 18,150 217800
    Year 4 19,965 239580
    Year 5 21,962 263538
    Year 6 24,158 289892
    Year 7 26,573 318881
    Year 8 29,231 350769
    Year 9 32,154 385846
    Year 10 35,369 424431
    Year 11 38,906 466874
    Year 12 42,797 513561
    Year 13 47,076 564917
    Year 14 51,784 621409
    Year 15 56,962 683550

    if he manage to pay 25% every month for EMI, he would pay only 14 Lac as EMI by 15 th year , how can this middle class person think of buying a modest apartment even in virar or panvel at current price of 30 Lac?

    Will that person ever be able to enjoy life ? the pleasures money brings ? He will end up paying the bank for the commiting the mistake of purchasing .

    I wish we won’t see family wars on streets and mafias fighting for Land. Because now Land is beyond common man’s purchasing power.

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