Realty developers have been urging the state government to consider a 50% reduction in these premiums to make the city more affordable for homebuyers and businesses.
Representatives of realtors’ body CREDAI-MCHI had recently met the state’s Revenue Minister Radhakrishna Vikhe Patil to highlight the issues leading to Mumbai’s waning allure as the country’s financial capital, primarily due to its exorbitant real estate prices.
“I will soon convene a meeting with developers along with UD, FM, and Revenue department to understand their concerns and consider reducing the premiums and permission fees. But at the same time, I would also request developers to consider construction of low-cost housing to ensure that housing is for all in the true sense,” Save said at an event.
A reduction in premiums is expected to reduce the burden on homebuyers, lead to increased tax revenue for the government, and in effect bolstering Mumbai’s economy to ensure long-term growth.
“The issue of exorbitant premiums has been a substantial impediment to the city’s holistic economic progress. Our analysis highlights how these premiums have deterred investments, stifled new developments, and exacerbated the housing crisis. Addressing this challenge is paramount to ensure Mumbai’s continued growth and prosperity,” said Boman Irani, president, CREDAI.On an average, realty projects in Mumbai pay Rs 54,221 per sq meter as approval costs through various premiums. The developers highlighted that this amount is nearly 25 times higher than premiums charged in Delhi-NCR, 50 times more than Hyderabad, and 47 times more than Bengaluru for residential real estate projects.“Housing Minister and the government have been proactive in acknowledging the pressing concerns raised through our study. This collaborative effort signifies a positive step towards fostering a more inclusive and sustainable real estate sector in Mumbai,” said Dominic Romell, President of CREDAI-MCHI.
Between the year 2000 and 2023, Hyderabad experienced a remarkable 36-fold increase in Gross Domestic Product (GDP), catapulting from $2 billion to $75 billion, while Delhi and Bengaluru exhibited impressive 29-fold and 27-fold GDP growth, respectively. In stark contrast, Mumbai’s GDP growth remained relatively modest, growing only 10-fold over the same period, showed the CREDAI-MCHI’s comparative analysis.
The study highlighted that such a reduction in premium implemented in 2021 had proven successful, contributing an additional Rs 12,000 crore in government revenue.
The difference in growth underscores the economic expansion gap between Mumbai and the other cities. Hyderabad outpaced Mumbai’s growth by a staggering 2683%, with Delhi and Bengaluru not far behind, surpassing Mumbai’s growth by around 1,375% and 1,683.33%, respectively.
A stark mismatch exists in average price per sq ft for apartments in the Mumbai Metropolitan Region (MMR) compared to Delhi NCR and Bengaluru. The average cost of an apartment in MMR is Rs 19,485, nearly double that of Delhi NCR and Bengaluru, the study showed. This discrepancy impedes access to jobs and erodes Mumbai’s competitiveness, discouraging professionals seeking affordability and safety.
Mumbai’s growth trajectory has been hampered by various factors, including urbanisation constraints and prohibitively high real estate prices. In contrast, Hyderabad, Delhi, and Bengaluru have harnessed their strengths, such as technology, government initiatives and an attractive investment climate, to fuel rapid economic expansion.