The World's Most Paradoxical Real Estate Market Is In India? [Infographic]
Mumbai is the densest major city in the world. Over five decades ago, urban planners reduced Mumbai's floor space index (FSI) to lower the population density of the city. But, this did not happen. People did not stop migrating to the city of dreams for the numerous opportunities it offered. They settled down in confined spaces and made the city their home. Those who could afford, bought homes; rest created the slums.
Population density in Mumbai is still among the highest in the world. Instead of lowering the population density of the city, FSI restrictions lowered the amount of floor space people consumed. In other major cities, floor space per person has increased with increasing population, but Mumbai remains an exception to the well-documented trend. An average resident of Mumbai consumes 48 sq ft of space. Curiously enough, the Federal Bureau of Prisons (U.S. Department of Justice) allots 45-60 sq ft to prisoners. Yet, this limited space costs a fortune in Mumbai.
Infographic by Sandeep Bhatnagar
Mumbai is far more productive than other Indian cities. Yet, income levels in the commercial capital of India are not high enough to match real estate prices in the city. For instance, an average Indian citizen would have to work for 308.1 years to buy a 100 sq mt residence in a prime neighbourhood in Mumbai, while it would take merely 48.4 years for an average American to buy such a home in New York. If building restrictions did not exist, residential property would have been affordable with more homes in a limited area.
Infographic by Sandeep Bhatnagar
Over half of Mumbai's population live in slums. This is inevitable, because Mumbai's 'building height' and 'rent control' regulations are among the most stringent in the world. The Indian government wants to make homes affordable, but the government does not sufficiently recognize that slums are a form of affordable dwelling units in urban areas, where formal settlements are beyond the reach of most people.
People in Mumbai's slum have incomes much higher than that of average Indian citizens. In slum, for instance, the total annual turnover is nearly USD 500 million. The per capita income of residents of Dharavi slums range between USD 500 and USD 2,000, which is above average, by Indian standards.
One could buy a formal dwelling unit 30 km far from the CBD in Mumbai for the same price at which one buys a similar informal settlement unit near the CBD. People live in informal settlements because they provide access to Mumbai's job markets and amenities, even at the cost of living in an informal settlement. By building affordable residential projects, governments often move them away from the city center.
Infographic by Sandeep Bhatnagar
Roads, highways, and railroad lines form a significant fraction of a city's land. But, roads are often used by people and vehicles free of cost, without giving much thought to the costs they impose on everyone else in the city. Even though a parked car consumes 14 sq mt of space in Mumbai, the daily car parking charge in Mumbai's CBD is merely USD 1.11. Even after adjusting for income levels, this is extremely low by global standards.
In London, it is USD 65.97 and in New York, it is USD 40. This is valuable land, which is almost as expensive as land in London or Tokyo. Moreover, a parked vehicle consumes the space of 8 people in Mumbai, while in New York Mid town, it occupies the space of .42 people. If you consider everything that a street's side-walks offer, this is a wastage of valuable real estate. Moreover, Mumbai's roads are extremely congested. Congested roads raise commuting time, adversely affecting a city's labour markets, freezing many people into fixed social classes.