Notorious for being the most expensive city in India, in terms of real estate to start with, authorities are making matters worse for those buying real estate in Mumbai by charging hefty premiums and development charges.
A TOI in a report on Saturday noted that builders in Mumbai are being forced to pay large bribes to the authorities to procure building permissions.
Civic activist Nitin Killawala told TOI that there is no justification for why faraway suburbs, say Goregaon or Mulund, should cost more than properties in Dubai. "Residential apartments in swanky buildings on upmarket Sheikh Zaid road in Dubai is available at about AED 1000 per sq ft (approx. Rs 22,500 per sq ft) with world-class infrastructure," he said.
Killawala asserted that it is the flat purchasers who are forced to bear the brunt of not only the high premium charges but also the bribes that builders have to pay. "It is understood that to redevelop a property, land owners need to contribute to government or local authorities towards upgrading of infrastructure and other public amenities. However, the recent phenomenon of charging 'premium' is bizarre: it costs more than the construction cost of the project.
Governments and authorities change, but one thing has remained constant: consumers bearing the brunt. In 2014, TOI ran a headline story about the "price list" established by corrupt officials. According to information from industry insiders, the requests for bribes amounted to Rs 1,200 per square foot in the city centre, Rs 800 per square foot between Bandra and Andheri, and as much as Rs 600 per square foot in the eastern suburbs. Nearly ten years later, some developers have indicated that the rates have risen significantly, while others have been more cautious.
The TOI report on Saturday states that official premiums and cess collected from builders are a major "cash cow" for the BMC. The BMC in January 2021 gave a 50 per cent discount in premium payments for a duration of 13 months, in a bid to stimulate business recovery following the Covid-19 pandemic. Despite this, it managed to amass over Rs 13,500 crore in the given timeframe.
Despite the sustained uptick in prices, demand for residential properties in the city remains robust. Mumbai municipal area saw an annual increase of 27 per cent in registration of properties in August at 10,902 units on better housing demand, according to Knight Frank India.
"Mumbai's residential market continues to remain strong as aspiring homebuyers embrace the trend. Remarkably, the share of registration of properties valued at Rs 1 crore and above continues to rise, led by surge in property prices and increasing preference among homebuyers for more spacious accommodation," Knight Frank India Chairman and Managing Director Shishir Baijal said.
Overall, Baijal said the housing market of the city continues to show a positive outlook, bolstered by the ongoing consumer demand.
The last month saw the most successful August numbers in the past decade in terms of registration as well as revenue generated, the consultant said.
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