From land markets to development premiums and fragmented governance, three voices offer competing diagnoses
Mumbai’s real estate market keeps growing, yet homeownership remains out of reach for much of its population. Three experts – urban researcher Hussain Indorewala, urban planner Vidyadhar Phatak and developer Kamlesh Thakur of NAREDCO Maharashtra, agree that simply constructing more apartments will not fix the problem. Where they differ is on the cause, and therefore on the cure.
The scale of the gap
Indorewala points to a 2008 report by the Deepak Parekh committee, which suggested that a home costing three to four times annual household income can be considered affordable. By that yardstick, he argues, Mumbai fails badly. He cites studies suggesting that 94 to 95 percent of the city’s families cannot afford a home. For a household earning an indicative Rs 30,000 a month, he estimates an affordable home would cost around Rs 14 lakh, a price that is now rare in the formal market, where even homes marketed as affordable can cost several times that. Thakur sees the squeeze extending higher up the income ladder. Even households earning Rs 50,000 to Rs 1 lakh a month, he says, may struggle to buy a Rs1 crore home once loan repayments are counted.
Is land scarcity the real cause?
The usual explanation is that Mumbai is a peninsula with limited land and restrictive building rules. Indorewala says this falls short. In his view, the city has enough land to house its population at moderate densities. He notes that repealing the Urban Land Ceiling Act did not bring prices down, and that several redevelopment schemes already allow relatively high FSI.
His central argument is economic. When manufacturing dominated the city, affordable housing helped keep wages and factory costs in check. As industry declined and real estate rose, land values became the engine of urban development. Policy, he says, now tends to facilitate private development and land-value appreciation rather than keep housing accessible. Globalisation sharpens the problem: the market draws investment from far beyond the city, while residents depend on local incomes and cannot easily move when prices climb.
Phatak accepts that geography and policy both matter. Historically low and uniform FSI limited development on well-connected land, such as areas near railway stations, while the demand grew from the 1980s as incomes and housing finance expanded. Mumbai’s peninsula also makes it harder to spread outward, unlike Delhi, Bengaluru or Hyderabad.
Does more FSI help, and what does it cost?
Phatak cites a 2024 study by Geetika Nagpal and Sahil Gandhi, which found that areas given extra FSI saw more housing units, smaller units and lower prices per unit, with buyers on lower incomes than in areas without increases. He treats this as evidence that extra development potential does not simply produce larger luxury flats, while noting a limitation: the study covers only buyers who used housing finance.
Yet, he argues FSI has shifted from a tool for managing density to a revenue instrument for government. Incentive FSI covers slum rehabilitation, schools, hospitals and parking, and developers can also buy extra rights. He cites a study estimating that development permissions, including FSI-linked payments, cost about Rs 50,000 per square metre in Mumbai, potentially 1.5 to two times the construction cost. That burden, he says, makes it hard for developers to cut prices even where more building is allowed.
Thakur makes a similar point in numbers. He estimates that 55 to 60 percent of a home’s sale value can go to land, government premiums and payments to planning authorities, so a Rs 1 crore flat could carry Rs 55-60 lakh of such costs before construction is complete. He also criticises annual increases in ready reckoner values, which he says have averaged 8-10 percent recently, and a 12 percent interest rate on premium installments, against 8 percent for certain delayed payments under the regulatory framework.
Finance, approvals and timelines
Thakur acknowledges that MahaRERA’s stricter rules have fixed earlier problems with premature sales and incomplete approvals. But developers must now invest heavily in land, TDR and premiums before earning any revenue. Banks are generally restricted from financing land and certain development costs, so developers turn to non-banking lenders at higher rates, and those borrowing costs, he says, end up in the price buyers pay. Towers of 40 to 50 storeys can also take four to five years to complete. He wants faster approvals, predictable regulation and easier access to bank finance.
Density without infrastructure
All three experts worry about adding density without adding services. Indorewala cites an estimate of about 8.2 square metres of public space per person in Mumbai, against roughly 21 in Shanghai and 24 in Manhattan, though comparability depends on how public space is defined. He says redevelopment debates focus on flat sizes while neglecting the quality of the neighbourhood.
Phatak points to textile mill redevelopment, where large amounts of new floor space were created without a proportionate expansion of roads. He argues that a 20-year citywide plan cannot replace detailed local area plans, and highlights Ahmedabad’s town planning schemes as a model. Thakur adds that taller buildings need reliable water, sewerage and fire-safety systems, and that residents moving from old buildings into new high-rises face higher maintenance costs.
Slums, redevelopment and rental housing
Indorewala argues that the Slum Rehabilitation Authority scheme, launched in 1997, has delivered less than promised and risks reproducing slum-like conditions in vertical buildings. He notes that slums are often among the few options open to low-income residents in a city where formal homes are prohibitively expensive. Phatak adds that free homes for slum residents are not costless, because developers can pass the expense on to buyers of market-rate flats.
On rental housing, the three differ. Indorewala says private rentals could reproduce the affordability problem without rent stabilisation and controls on land prices. Phatak doubts that private investors will build low-income rentals, citing uncertainty over rent regulation, tenant defaults and recovering possession. Thakur wants tax incentives and more viable residential REITs, noting that residential rentals currently earn less than commercial property.
Region, transport and governance
Phatak argues that regional mass transit must be central to housing strategy, and that fragmented agencies weaken planning, with infrastructure often arriving after development. He cites Vasai-Virar as an area where population grew faster than civic services. Thakur wants complete satellite cities with local jobs, schools and healthcare, such as proposed education and health hubs, rather than places where people only sleep before commuting to Mumbai. Indorewala points to Navi Mumbai, shaped by public planning under CIDCO, as a model where public control of land made a difference.
Conclusion
The three agree on several points: higher FSI alone will not deliver affordability, density needs infrastructure, and rental housing needs a better framework. They split on who should carry the cost of reform. Indorewala would take land out of the speculative market through public land and community land trusts. Phatak would build on evidence, local planning, regional transit and coordinated governance. Thakur would cut the premiums, financing costs and delays that developers face. Any lasting answer will probably borrow from all three: cheaper land for housing, lower avoidable costs, and the roads, water and public space that make dense neighbourhoods liveable. Mumbai’s challenge, in the end, is to build homes people can actually afford.
