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Last Updated: Saturday, 11 November 2006, 00:52 GMT
Mumbai houses priced out of market
BY Monica Chadha
BBC News, Mumbai

A Mumbai slum
Rising property prices have also made slum dwellings expensive
It should not have been hard for someone like Riyaaz Amlani to find a house in the city where he has lived all his life - India's financial capital, Mumbai (Bombay).

But the 31-year-old entrepreneur, who successfully runs a chain of coffee shops called Mocha and several other restaurants across the country, has been unsuccessful at finding a home he can call his own.

Not even with a budget of 10m rupees ($222,000).

So he continues to live with his mother and brother.

"It is a situation where I cannot afford the houses I like and don't like the houses I can afford," Mr Amlani said.

"I began looking for a house a little over a year ago. I have just given up on the idea because it seems to be a waste of time."

Property prices in Mumbai are on par with some of the most expensive cities in the world, and are probably the highest in India.

Limited supply

While places in the main city area can range from anywhere between 15,000 ($335) to 40,000 rupees per square foot, those in the suburbs can start around 5,000 rupees and go up to 25,000.

Chairman of Knight Frank property consultants in India, Pranay Vakil, says the reason for such astronomical rates is because the supply is limited.

"The requirement for Mumbai is 84,000 houses a year, while the government and private players combined can offer only 55,000.

Riyaaz Amlani. a Mumbai executive
Searching for a house has become a waste of time for Riyaaz Amlani

"So with a shortfall as big as that, is it any surprise that the prices have sky-rocketed and informal housing has grown beyond control?" he asks.

Informal housing is estate agents' parlance for slums, in which more than 60% of the city's 18 million people live.

Thousands of people come to Mumbai in search of jobs as numerous big national and international companies are headquartered here.

It is also the entertainment capital with the Hindi film industry, Bollywood, and a majority of the country's television channels based here.

Tall residential buildings are coming up at various locations and new ones are advertised every few days, but people in the housing sector say they are just not enough.

One of the most common sights is tall, gleaming, steel-and-glass buildings standing alongside vast slums.

Problem law

In fact, one of the city's prime business districts, Bandra-Kurla Complex, is situated right next to Asia's largest slum, Dharavi.

So scarce and expensive is housing that even a small 8x10 foot hut in Dharavi is priced between 150,000 to 300,000 rupees.

Mr Vakil says there is little land in the city for new construction.

Lack of organised renting and archaic rental laws further compound the problem and have pushed up property prices.

"There is not a single company or developer constructing only rental apartments and buildings like the kind you find in Europe and the United States," he said.

The recognition of housing shortage in Mumbai by authorities is wonderful
Niranjan Hiranandani,
Hiranandani Constructions

A 1947 law regulating tenancy and rent is another problem.

It has frozen rents at the 1947 levels, and protects tenants against eviction.

This has delayed the freeing up of a large number of flats that continue to be occupied by people who pay unrealistically low rents.

The state government recently announced a new housing policy to make housing available and affordable for all, especially the lower and middle-income groups.

It aims at promoting rental housing and new construction, redevelopment of slums and old buildings and boosting foreign investment in the housing sector.

The policy also promotes special township schemes just outside the municipal limits of Mumbai so that people working in the city can find homes to suit their budgets.

Issues and tasks

The response of the construction industry appears to be positive.

The managing director of Hiranandani Constructions, Niranjan Hiranandani, says the recognition of housing shortage in Mumbai by the authorities is "wonderful".

Mofatraj Munot, a Mumbai builder
Mofatraj Munot says the new housing policy may prove effective

"They have listed the issues and set deadlines for implementing tasks. They have also said they will improve infrastructure in the city, which is a big plus," he said.

The chairman of Kalpataru Constructions, Mofatraj Munot, said the new draft policy "is a step forward, and will give further impetus to the housing industry."

The draft policy will be discussed over the next two months before it is finalised.

After that, how long the government takes to implement it remains to be seen.


SEE ALSO
Selling India's slums
03 Jul 06 |  Business
India's 'biggest slum demolitions'
03 Feb 05 |  South Asia
India's Manhattan loses sheen
28 Apr 04 |  South Asia
Bombay's billion dollar slum
01 Mar 04 |  Business

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