MUMBAI: Even as Mumbai’s real estate prices touch historic highs — with certain Bandra projects quoting ₹1.5–2 lakh per sq ft developers argue that the cost surge is not only inevitable but may escalate further. In a candid conversation with CNBC-TV18, veteran developer Dr. Niranjan Hiranandani, Founder & Chairman of the Hiranandani Group, explained why affordability remains elusive and what must change before Mumbai’s housing market stabilises.
A surprising insight that emerged:
“If I sell a property in Bandra for ₹50,000 a sq ft, nearly ₹25,000 goes directly to the government,” Dr. Hiranandani said, highlighting how taxes, premiums and charges now form almost 50% of the final property price.
Why Are Mumbai’s Property Prices So High?
1. Government Charges Have Skyrocketed
According to Hiranandani, the single biggest factor behind soaring prices is the government’s revenue model:
- High ready reckoner rates
- Expensive FSI premiums
- Steep stamp duty & GST
- Multiple infrastructure-related levies
Developers claim that the state “makes a packet” from real estate — a necessity for funding public projects, but one that has gone “overboard”.
2. Redevelopment & Slum Rehab Costs
Mumbai’s geography makes greenfield development nearly impossible. Most new supply comes from:
- Old society redevelopment
- Slum rehabilitation
Both involve massive acquisition costs, higher FSI payments, and rehabilitation obligations, pushing final apartment prices beyond the reach of the average Mumbaikar.
3. Limited Land & Growing Infrastructure
The city is witnessing unprecedented infrastructure build-out: Metro lines, the Coastal Road, MTHL and more.
While this improves connectivity, it also inflates land values in adjoining micro-markets.
Is Mumbai Ever Going to Become Affordable?
Short-term outlook: No.
Long-term outlook: Possibly.
Hiranandani believes that prices will remain elevated for at least the next 12–24 months. Only when new areas — unlocked through infrastructure like the Coastal Road, Metro, MTHL — mature will the city see more rational pricing.
He cited examples:
- Powai once sold at ₹450 per sq ft (1990s) — today it’s ₹40,000+ per sq ft.
- Thane’s Ghodbunder Road sold at ₹1,250 per sq ft — today ₹27,000+ per sq ft.
“Follow where the development goes. That becomes the new city center,” he noted, hinting that affordability lies in emerging suburbs, not South Mumbai or Bandra.
What About Affordable Housing?
Hiranandani was blunt:
“No developer doing redevelopment or slum rehab can price homes affordably. It’s impossible.”
Key reasons:
- High land premiums
- High construction inputs
- High government fees
- Mandatory free-sale component for rehabilitation
He said Mumbai needs a dedicated war room for affordable housing, or the segment will remain a “pain point”.
PPP Model for Infrastructure: A Solution or Not?
There’s increasing citizen frustration about:
- Delayed infra works
- Traffic chaos
- Lack of maintenance
Many suggest the PPP (Public-Private Partnership) model for civic infrastructure.
Hiranandani agrees but with caution:
- PPP works for airports, ports, specific redevelopment projects
- It cannot replace government-led mega-infrastructure like metro rail expansion
- PPP should be used selectively, case-by-case
Future of Mumbai Real Estate: What to Expect
Likely Trends
- Prices will remain stable or rise in core micro-markets
- New growth corridors (like parts of Bandra, Thane, Navi Mumbai, Panvel) will see appreciation
- Transit-oriented development will improve value of suburbs
- Long-term affordability depends on government reforming premiums and speeding approvals
Expert Opinion
Hiranandani remained optimistic for the long run:
“If we do all this, we’ll be a different nation. Real estate is not just an investment — it’s emotional.”
Suggested Visuals for the Article
- Infographic: Split of property price (Land cost vs Govt charges vs Construction)
- Map: Mumbai development corridors & upcoming metro lines
- Chart: Price appreciation in Powai & Thane (1990–2025)
- Photo: Bandra, Powai and coastal road development
Conclusion
Mumbai’s real estate market is unlikely to cool in the near future, driven by government policies, redevelopment challenges and infrastructure-led land value appreciation. For homebuyers, this means reassessing expectations, exploring emerging suburbs, and tracking where new connectivity is unlocking value.
What do you think — should the government reduce premiums to make Mumbai more affordable?
Share your views and stay tuned for follow-up updates on India’s evolving housing market.
The post Mumbai Housing Crisis: Why Real Estate Prices Refuse to Fall — Insights from Dr. Niranjan Hiranandani appeared first on Vastu Krupa Estate.
