The Maharashtra government is contemplating cuts to real estate project premiums in Mumbai, potentially leading to reduced property prices in the metropolitan region, sources familiar with the matter said. Mumbai’s real estate market ranks among the priciest globally, according to a report by ET Now.
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Currently, developers in Mumbai face over 20 different premium charges that account for nearly a third of a project’s cost. These levies, such as fees for staircases, elevators, and communal spaces, are paid to municipal bodies and are notably higher than in other major Indian cities.
A recent analysis by the Confederation of Real Estate Developers’ Associations of India (CREDAI) found Mumbai’s developers pay roughly Rs 5,400 per square foot in premiums, the steepest nationwide.
While cities like Hyderabad, Chennai, Bengaluru, and Delhi NCR typically impose about 10 premium categories, Mumbai has nearly double. Reports suggest that Mumbai’s residential projects accrue premiums 25 times that of Delhi NCR, 50 times Hyderabad’s, and 47 times Bengaluru’s, the report said.
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At a recent event co-hosted by CREDAI and the Maharashtra Chamber of Housing Industry (MCHI), State Housing Minister Atul Save hinted at the government’s plans to rejuvenate the city’s real estate sector, which could include reducing these premiums.
This initiative aims to promote affordable housing and support ongoing slum redevelopment projects, as nearly half to over half of Mumbai’s residents live in underdeveloped areas, ET NOW reported.
CREDAI-MCHI has recently urged the state government to slash these hefty real estate premiums by half.
Notably, the city’s municipal body, BMC, cut premiums by 50% for 13 months in early 2021, aimed at revitalizing the post-pandemic property market.
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While the move garnered over Rs 13,500 crore ($1.78 billion) during the discount period, revenue has since plummeted after the incentive’s conclusion.
