A report by CREDAI-MCHI shows this disparity and calls for a 50% reduction in premiums to stimulate the city's struggling real estate market.
Mumbai is known for its towering skyscrapers and crowded streets. But it is also grappling with a real estate issue that threatens its economic growth. Mumbai real estate developers shell out an average of INR 54,221 per square metre in approval fees, paid as various premiums to the municipal corporation and other government bodies.
This cost is significantly higher than in other major Indian cities like Delhi NCR, Chennai, Bengaluru, and Hyderabad. The disparity is so huge that Mumbai collects premiums for residential real estate developments at rates 25 times higher than Delhi NCR, 50 times higher than Hyderabad, and 47 times higher than Bengaluru.
These findings are part of a report titled "Retaining Mumbai's Financial Status" by CREDAI-MCHI, an organisation that represents leading builders. The association had also requested a 50% reduction in premiums from the state.
To encourage business during the pandemic, the BMC provided a 50% discount on premiums for 13 months between January 2021 and January 2022. However, collections have decreased since the offer ended.
The report shows disparity in the average price per square foot for flats in Bengaluru and Delhi NCR compared to the Mumbai Metropolitan Region (MMR). The average price of a flat in MMR is INR 19,485. This is almost double the average in Bengaluru and Delhi, NCR.
Over a 23-year period (2000–2023), Mumbai's GDP increased tenfold. This is still modest when compared to cities like Hyderabad, Delhi, and Bengaluru, which saw their GDP increase by 36, 29, and 27 times, respectively.
The research points out that high premium prices are detrimental to Mumbai's economy. This is because the investors are deterred by the high property costs. So they opt for cities with cheaper real estate. High approval charges increase the city's already high living costs for citizens and businesses.
Due to high living expenses, particularly property costs, people are migrating to other cities for a high quality of life at a low cost. This migration trend is stifling jobs and the overall economy in Mumbai.
The builders' organisation argues that a 50% reduction in rates would revive many development projects and rejuvenate Mumbai's real estate market.
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