First let me clarify there is nothing called a Rs. 1 crore house in Mumbai anymore. If you buy a Rs. 1.5 crore house, it actually works out as follows:

Technical cost of the house (today) is really immaterial…your cash flows are as follows:

Down payment              Rs. 30 lakhs

Transaction costs          Rs.  15 lakhs

EMI                                  Rs. 288 lakhs


this means the total cost of the house is Rs. 433. Now assume that this house has appreciated to Rs. 5.8 crore after 20 years, what is the IRR on your cost? Hey gimme a break….now read what my friend Vivek Kaul has to say about a Mumbai house…


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  1. Also there are restrictions on ‘booking profit’ as one has to either invest in the property again or buy some govt bonds.

  2. True. But how will you explain that to the culture in India which thinks real estate as an investment and not as a place to live?

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