Arbitraging opportunities….
Sir what can I do…the rents are too high?
Many kids ask me this question…and I am amazed how this city of opportunities also finds answers to this question.
First of all the high real estate prices in this city is keeping the rents high. However (luckily) there are no restrictions on the number of people who can live in one house. (The builders lobby is trying to bring this in, and soon municipal corporations will insist that only 2 persons per bedroom can live in one house – of course the no. of bedrooms will be increased by the smaller builders!!).
So you have young management graduates, ordinary graduates living in a group – and sharing the rent costs. In case of lower end employees like guards and drivers, they live about 10 or even 20 to a room! This is possible because all of them work shifts. So the guys in the night shift sleep during the day….
Paying rent in Mumbai, paying Mumbai level salaries and the high power costs makes very little sense for MOST lower end jobs. Ahmedabad is 40% cheaper in rent, 50% cheaper in labor, and about 30% cheaper in electricity! So if it is some data entry work or low end software work the chances are somebody will hire the facilities in Ahmedabad and outsource it FROM A software company in Mumbai!!
With 2% rental yields in residential properties and 4% yield in commercial property …Mumbai is showing all the signs of a decaying city! Hmmm i am expecting a bunch of angry mails, but the real estate to salary, real estate to retail margins, the average speed at which a car travels, the ugly old buildings – which the landlord has no incentive to rebuild, etc. are all LEAD indicators of Mumbai going the Kolkatta way…..
pattu
“they live about 10 or even 20 to a room!”
A Madras autodriver told me that he did this 25 years ago when he drove a taxi in Bombay! That was in a slum. Now it appears this is happening in authorized buildings!
Maaran
Most indian cities are already in such a terrible mess. I can’t imagine how things can get any worse.
Mumbai pays an overwhelmingly majority % of the tax collected in India which Politicians in Delhi & the babus steal, fill their pockets. They claim to spend it on our “helpless” poor rural people. We keep nodding & letting ourselves be robbed.
Its tragic to think that this circus isn’t going to end anytime soon.
Suresh
great one and great comment (pattu).
met an old school friend and he said unless you live out of Bombay(assuming you grew up here) you cannot even begin to see the decay.Fully agree we are headed the Calcutta way.oops Kolkata.Mumbai.
More likely it will become like an African capital city. Splendid condos with heavy security and teeming slums outside. only the very rich and the very poor will exist. goodbye middle class!
Rajeev
Urban decay is due to in efficient municipalities. No effective garbage clearance, in sufficient sewage treatment facilities etc.
If it is any consolation, the millions of migrant workers in China live similar life in the second largest economy in the world. Most Chinese workers do not have any kitchen in their house and earn a salary between 80 to 120 USD per month. Why blame India? What India has is a transparent financial system which does not hide things.
I am an optimist and believe that sooner or later Indian syatem will iron out the kinks in the present laws which allow the tenant to become virtual owner of the property. lanlords will have to pay much larger civic taxes, based on the value of the property. There can not be any progress unless the corporation can earn more from taxes.
SAM
I totally agree – Bombay is going Kolkatta way. I also agree that Bombay is getting shortchanged/milk by politicians in Delhi.It really scary – teeming millions in slums, local trains service breakdowns, flooding and power outages. I have been living out of Bombay for 15 years now, and thank my stars each time I go there!
Vishal
Yep, facilities in Mumbai suck. But I have to say this, Mumbai people are the sweetest. It was true 15 years ago, it is true today.
SAM
Vishal,
I so totally agree with you – coz I am a Bombayit – Mumbaikar :).
People there are professional – right from your plumber, electricians tailors etc. And the best part we Bombayites have a heart but are non interfereing. Sounds like an Elegy 🙁
Senthil
//Mumbai pays an overwhelmingly majority % of the tax collected in India//
The truth is because most of the Companies have their Registered / head offices are located in Mumbai the Tax paid goes to Mumbai a/c. In reality these are all India’s Tax. And Mumbai can not claim it is only Mumbai’s!
D. Senthil