Buying property in Mumbai? Investment banker says you lose 2 years’ returns before you even begin

Rohit Agrawal, an investment banker, stepped out last weekend with a simple goal: scout for real estate investment options. But what he encountered instead was a staggering wall of upfront costs. 

From stamp duty to brokerage, the cumulative expenses, he says, border on the absurd.

Calling it “obscene,” Agrawal broke down what a typical buyer in a city like Mumbai ends up shelling out before even getting the keys: 7% in stamp duty, 0.5% for documentation, another 0.5% for loan-related charges, 1% brokerage, and 1% in miscellaneous costs.

That’s nearly 10% of the property’s value gone before returns even begin.

“The whole cost of just investing in real estate is so obscene.”

“Overall ~10% upfront cost just to buy real estate in a city like Mumbai where prices are already inflated is bizarre,” he wrote on Linkedin. 

“This is at least 2yr returns foregone to start with.”

Agrawal admitted that these costs have long kept him from viewing real estate as a viable investment. “Something which has always swayed me away from considering real estate as an investment (forget other factors),” he added.

His frustration extends to what he sees as policy inertia. “Totally addressable by govt but who cares, there is enough and more demand,” he wrote.

Other voices in the finance space are sounding a different kind of alarm. Akshat Shrivastava, founder of Wisdom Hatch, warned of another trap: artificially inflated mega townships.

“India has 1/4th land compared to the US. And, our population is 4X that of the US. This creates a factor of 16. Plus we have a growing population which will peak in 2065,” he posted on X.

Despite disruptions like the 2008 crisis and 2016 demonetization, India’s property market has climbed steeply. “This should have killed the Real Estate market in India. But, our property market is easily up 200–300% since then,” he wrote.

Yet not all properties are gold. He warned of townships where corrupt FAR (floor area ratio) adjustments flood markets with unsustainable supply.

“If the FAR is let’s say 1000%, the builder can bribe and increase the FAR to let’s say 5000% (and build more units) in a confined space,” he said. “The shiny building that you see today: in all likelihood, is a dead investment a few years down the line.”