Mumbai real estate is witnessing yet another tumultuous phase. The rising rental values for commercial property are leaving property seekers in confusion. Property analysts say that this unprecedented hike in commercial rental values will force many companies to exit Central Business Districts (CBDs) in search of affordable office space.
Mumbai is one of the top ten most expensive cities to rent, lease or buy property. Business firms, who want to have a presence in Mumbai because of its strategic location, are finding it difficult to even rent a property there. Mumbai real estate brokers say that property developers ask for sky-high just as one tenancy ends and other begins.
High rentals for residential property are turning out to be a nuisance for corporates. Most companies give their employees the facility of Housing Rent Allowance (HRA). This allowance is reworked annually to suit the market condition, which normally is not more than 5 – 10%of an employee’s salary. But present market conditions have forced many foreign companies and multinational banks to reconsider leasing property for employees. Now, companies are advising employees to fond accommodation on their own and the company pays a part of this rent.
Property brokers in Mumbai explain this trend further. They say, “property owners are demanding such high rentals that a common man is hesitant to even inquire abut it. It is more feasible to buy an apartment in Mumbai than have it on lease.”
While the secured leasing laws are making it easier to get an apartments on lease in Mumbai, but the sky-rocketing rentals are making firms think twice before leasing apartments.
Even though redevelopment has started in many parts of city and property prices are expected to come down, nothing major has happened yet. Many of the property projects are lying vacant in many areas of the city. Investors have been holding on to these flats for the past 5 to 10 months anticipating that the demand will emerge. But in spite of a slow down in the demand side the property rates aren’t dropping. It seems that buying a house in Mumbai is a distant dream for many.