Thursday, 3 February 2011

Is Mumbai in a real estate bubble? Why or why not?

Here is interesting article from Times of India "High flat rates give rental market in Mumbai a boost" http://timesofindia.indiatimes.c...

According to this article, real estate price in Mumbai has gone up by 30% over last 6 month (certainly the clear sign of bubble!). If you are purchase 2 bed room condo in Goregaon, the price is Rs 12 mil ($260K). By putting 15% down and borrow the rest at 9% interest rate, your monthly payment is Rs 90,000 ($2,000) a month (on top of it you pay HOA, insurance and property tax). The rent on equivalent property is Rs 20,000 (gross yield of 2.5%). 

Thus, if you are to determine the property value on rental yield, Mumbai real estate is certainly "bubble" territory


  1. Mumbai population haven't increased 30% in the last six months neither businesses have grown at that space. Certainly it is builder-politician nexus is at work in the Mumbai. But when this builders have to pay back money to banks and other lenders at high rate , eventually they will blink first. There are lot of small time builder ready to sale at much lower rate in the market, but as big builders are holding their properties, these guys are also waiting and watching. Nothing has changed in Mumbai in last 5 years on the infrastructure side.It is becoming worst and worst day by day. I am from Mumbai and it was clean and less crowded 10 years back. Now it so crowded that u feel u r always bugged by someone 24X7. I appeal buys to wait for few month or may be year and see how market fall down. When BSE was on 21K, all these tv channels used to drum up that it will go up to 25K next six month and year end to 30K. Now after 2 years we all know where it went. If you are genuine buyer and want to buy and enjoy peaceful life in house, dont fall pray to this bubble. it is about to burst.

  2. Dear Rajesh -- thanks for your comments and valuable local information. Much appreciated! As mentioned in my blog posting, I certainly think Mumbai real estate is "bubble territory" and have no intention in investing in Mumbai for now.

    There were interesting article in WSJ about the sign of decline of real estate sales in Mumbai for your reference.

    Luxury Housing Boom Takes a Breather

  3. Book fully Furnished Serviced Apartment Gurgaon, Our modern service apartments is an alternative to the hotel for better Apartments accommodation in Delhi NCR accommodation. You can enjoy the visit to Noida and Delhi NCR. We offer rental services apartments services like hotel in affordable prices. In this service apartments you can enjoy the high quality of accommodation.

  4. No, i do not think so that real estate price in mumbai is gone in last six months. Mumbai Property Price