According to an article this week in the Times of India, the Dutch bank's Indian unit renewed the lease for one of its offices at Sakhar Bhavan in Nariman Point, Mumbai's main business district, for 500 rupees ($12) a month per square foot.
That rent, the highest ever for India, is almost three times the rate the bank was paying for the premises until now, the newspaper report said.
It's also double the going rent for prime office space in Singapore. Even Dubai, with its petrodollar-fueled real-estate frenzy, is cheaper than Mumbai.
``There's currently a huge supply crunch of quality office space in Mumbai,'' says Anuj Puri, chairman of Jones Lang LaSalle Meghraj, a real-estate consulting firm. ``All financial institutions want to be in the central business district, and there are presently no feasible alternatives.''
Sky-high Mumbai rents are all the more ridiculous considering that most of the city's real estate is a dump and urban amenities are woefully inadequate.
``Mumbai in no way matches the infrastructure and quality available elsewhere in the Asia-Pacific sector,'' Puri says.
While the business cycle may have accentuated Mumbai's real-estate deficiency -- just as it has caused the market for traders and investment bankers to tighten, pushing up financial- sector wages -- the core problem is structural.
The city's vertical growth has been stunted by overly restrictive floor-space-index norms; supply of land has been stymied by a draconian Urban Land Ceiling Act, which was brought in to curb hoarding but has ended up discouraging genuine and economically beneficial transactions.
At the same time, demand for office space in Mumbai is soaring because of a surge in the flow of money and deals, in line with what one would expect to see in the world's second- fastest-growing major economy. ....
Even before the current bout of rental escalation, Mumbai offices were the third-most-expensive in the Asia-Pacific region after Hong Kong and Tokyo.
Mumbai's urban planners should realize that the city's acute space crunch is now spiraling out of control, and that work on a brand-new financial district must begin immediately.
> Looks like the same could be said about the residential market in Mumbai
> Sieht ganz so aus als wenn die Probleme auch den wohnwirtschaftlichen Immobiliensektor betreffen
Mumbai, India’s financial capital is one of the most expensive places in the world to buy a condominium unit, according to a Global Property Guide survey.Apartments in South Mumbai cost around US$9,000 to US$10,200 per square metre. “Such stellar prices can only be found in the world’s leading cities,” says Yasmin Rahman, yields and valuation analyst at the Global Property Guide.
These prices are exceptionally high for a country with a GDP per person of only US$770 in 2006. Even for highly paid call centre agents with annual income of around US$3,000 to US$4,500, these condominiums are still unaffordable.
Property prices in other cities in India are significantly cheaper than in Mumbai. In New Delhi, the administrative capital, used apartments cost around US$2,000 to US$3,000 per sq. m. In Bangalore, India’s Silicon Valley, prices are around US$950 to US$2,000 per sq. m.
Shares of Unitech Ltd., India's largest real-estate developer by market value, soared 26,869 percent during the past three years. Anant Raj Industries Ltd., a competitor, leapt 39,548 percent