For the India head of a global private equity firm that has an office in South Mumbai, conversations invariably veer around Mumbai’s infrastructure.
The senior executive, who requested anonymity, lives in a luxurious apartment at Lower Parel, the place to be nowadays, but is frustrated with his daily drive to South Mumbai. It’s not a long distance, but it can take over an hour. “It’s a sheer waste of time, especially in an economy where you should be working on deals, not manoeuvring through traffic jams,” he complained.
The problem is not just the inadequate infrastructure or traffic. The larger issue is that many people, regardless of how much they earn, can’t afford a house near their place of work.
What turns the average executive’s dream into a nightmare?
South Mumbai’s astronomical prices are no secret — at Nariman Point’s NCPA Apartments a house reportedly went for Rs 97,000 per sq ft three years ago — but even in Bandra-Kurla Complex (BKC), the new commercial hub, new houses cost Rs 35,000 to Rs 40,000 per sq ft.
“When I shifted from New Delhi, I could not come to terms with the prices and quality of resale houses at BKC. When I finally decided to take the plunge, prices had skyrocketed,” said Sandeep Singh, of ProBuild Developers. He used to be a senior executive with a real estate firm at BKC but has now started his own company. Singh presently lives at Santacruz.
Brotin Banerjee, MD and CEO of Tata Housing, a pioneer in the housing segment, raised similar concerns. Banerjee said that when he first came to Mumbai he too could not afford a house near his Churchgate office. So, he travelled every day from Andheri to work.
Although Tata Housing has built affordable houses, they are about an hour’s train ride away from the city. The Tatas would like to build affordable houses within the city, but “land prices are too high. If a land owner is satisfied with reasonable profits, we are game for such projects”, said Banerjee.
Industry experts said that while profit margins in affordable housing are healthy, those in the luxury segment are unimaginable. “Affordable housing offers a 25 per cent margin, but in the luxury segment it could be 100 to 200 per cent,” said an analyst with a leading consultancy. He requested anonymity as he is not authorised to speak to the media.
“Nonsense,” said the CEO of a leading construction firm. “About 30 per cent of the cost goes in acquiring the land. Add 10 per cent for government approvals. Then you have to buy transfer of development rights at exorbitant rates, so you are left with only a 25 to 30 per cent margin.”
“The sad part is, even where new commercial hubs come up, apartment prices shoot up. So those areas too become unaffordable,” said Siddharth Parulkar, a middle-level manager with a pharmaceuticals firm at Lower Parel who rides his Enfield every day to work from Thane.
Though the commercial centre of the city is shifting from Nariman Point to Lower Parel and BKC, the new hubs remain unaffordable for most executives.
While corporations have successfully renegotiated prices and rents over the past year, residential apartment buyers have had no such luck.
“For three years I resisted a job shift because my office was close to my home. But now my office is at Nariman Point, and I don’t dare inquire what the prices are there,” said Anuj Anand, a consultant with an HR firm. Anand drives all the way from his Versova home to office every day.
The irony is that Anand may actually be among the lucky ones. Many others travel double the distance every day with no solution in sight for their housing woes.