Developers have urged the government of Maharashtra to consider a 50% reduction in premiums that are paid to the authorities to make the city more affordable for homebuyers and businesses.
Representatives of realtors’ body CREDAI-MCHI have 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.
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.
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.
“There is an urgent need for immediate policy reform and a rationalised approach to the premium structure within Mumbai’s real estate sector. The exorbitant premiums levied on developers have not only soared to unsustainable levels, particularly burdening home buyers in the affordable and mid-affordable segments but have also set in motion a domino effect adversely affecting the city’s holistic economic landscape,” said Boman Irani, President, CREDAI.According to him, timely resolution of this matter is imperative to safeguard Mumbai’s enduring growth trajectory and uphold its esteemed status as the undisputed financial capital.“Mumbai has long been a beacon of economic progress, and it is with concern that we observe its stagnation attributable to the burden of exorbitant premiums. We earnestly urge the government to carefully deliberate upon our recommendations with special attention to the proposal of a 50% reduction in premiums,” said Dominic Romell, President CREDAI-MCHI.
He believes this measure can serve as a strategic catalyst to revitalise our city’s economy without compromising its esteemed standing on the global stage. These steps must be taken in a collaborative spirit for the collective betterment of Mumbai and its residents.
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.
