Mumbai joins the costliest cities club

It appears as if Mumbai has arrived at a stage where it can now be compared financially to cities like New York, London and Tokyo.

Mumbai has long been known as the financial hub of India, both in terms of the cost of living there as well as the investment income generated from within the city limits. In the recent property surge that has occurred within India, Mumbai has found itself playing an integral role in the stoking of the nationwide real estate market.

However, the combination of a lack of adequate housing supply in the city, commercial areas within the city getting larger and an ever-increasing demand for real estate investment opportunities has driven the cost of living in Mumbai up to rates that are quite remarkable. In terms of cost, the average price in the real estate market in Mumbai is now up there with global cities like London, New York and Tokyo.

The BandraKurla Complex in Mumbai, which represents a microcosm of the larger city, has seen rents rise 80 per cent in 12 months to the point where people are now paying INR 425 per month for every square foot of land that is within the plot of property they own (INR 425 translates roughly to USD $10.80).

This has had a strange effect on the market to date, as builders are now starting to realise that they can get away with charging ridiculous figures for their real estate at certain times. Recently a 10,000 square foot house was sold for INR 600 million. That works out to 60,000 Rupees per square foot or about 140 times the average per unit cost of property in the city. This is not even the most obvious evidence of large price increases as in some other areas of the city properties have been sold for as much as 70,000 Rupees per square foot.

With the demand still high and the supply still low and both expected to remain consistent with respect to each other for some time, it is quite possible that investors will see this pattern continue within the city.