Why Mumbai is facing hurdles in achieving affordable housing despite government schemes? Niranjan Hiranandani weighs in

Despite ambitious governmental initiatives like the Pradhan Mantri Awas Yojana (PMAY) aimed at fostering affordable housing, major Indian cities like Mumbai continue to grapple with unaffordable home prices. Dr. Niranjan Hiranandani, Founder and Chairman of the Hiranandani Group, in an old video posted on social media, said that a significant portion of housing costs — up to 50% — is consumed by various government levies, such as GST and stamp duty.

This heavy taxation inflates house prices, thereby limiting the availability of affordable homes. Consequently, real estate developers face challenges in delivering cost-effective housing options for potential buyers. 

Dr Hiranandani identified the ready reckoner rate as another obstacle to affordability. This rate sets a minimum price for property transactions, making it virtually impossible for developers to offer homes below a certain price threshold. Additionally, developers often prioritise slum rehabilitation projects, which, while necessary, limit the scope for creating other affordable housing options. 

"If you buy a house from me in Mumbai today, 50% of the money goes to the government directly or indirectly," Dr Hiranandani stated and highlighted the complexity of providing affordable housing options without incurring penalties from the tax department. 

Moreover, the real estate sector is encumbered by cumbersome approval processes and outdated regulations, which increase costs and delay project completions. There is an urgent need to enhance the ease of doing business within the real estate framework to reduce costs for both developers and consumers. "Third, ease of doing business needs to be improved," stated Dr Hiranandani, urging for reforms that can streamline operations and make affordable housing a realistic goal. 

Improved city master planning is crucial in addressing these affordability issues. Dr. Hiranandani advocated for a holistic approach to urban planning, emphasising the importance of integrating infrastructure improvements and efficient services within urban environments. "By improving infrastructure, transportation, and overall living conditions, cities can enhance the quality of life for residents," he noted. 

This approach aims not only to make housing more affordable but also to enhance the overall livability and sustainability of urban areas. 

Mumbai real estate

The Mumbai real estate market saw a significant increase in property registrations in 2024, with over 1.41 lakh registrations reported. According to data from Knight Frank India, a prominent real estate consultancy, the western suburbs and central suburbs continue to be the most popular areas for purchasing an apartment in Mumbai.

In 2025, the top five areas in the Mumbai Metropolitan Region for buying an apartment include Borivali, Kandivali, Malad, Goregaon, and Dahisar. In December 2024, the western suburbs accounted for 53% of the total property registrations, with over 12,000 properties registered in this area alone.

Central suburbs such as Mulund, Bhandup, Vikhroli, Kanjurmarg, and Ghatkopar are popular among first-time homebuyers for investment. Data from Knight Frank India shows that in December 2024, 33% of all properties registered in Mumbai were located in the Central suburbs.

Residential properties in the western and central suburbs of Mumbai typically range from Rs 20,000 to Rs 50,000 per sq ft. Local brokers report that rental values for a 2-BHK apartment in these areas range from Rs 35,000 to Rs 70,000 per month.

Thane, a satellite city near Mumbai, has established itself as a sought-after area within the Mumbai Metropolitan Region (MMR). The residential property market in Thane witnessed a significant increase in prices, with premium projects reaching rates as high as Rs 25,000 per square foot in 2025. The average pricing range for properties in Thane is currently between Rs 15,000 and Rs 17,000 per square foot.

The real estate market in Navi Mumbai has experienced a significant increase in property prices in various areas, such as Ulwe, Dronagiri, and New Panvel. This surge can be attributed to the ongoing infrastructure developments, particularly the construction of Atal Setu, which connects Navi Mumbai to South Mumbai and the upcoming Navi Mumbai International Airport (NMIA).

The NMIA is projected to be operational before the onset of the 2025 monsoon season, with a recent trial landing taking place earlier this week. Property prices in this area range from Rs 10,000 to Rs 20,000 per sq ft in these areas, while the rental value for a 2-BHK property falls between Rs 20,000 and Rs 50,000 at the upper limit.

The development of the Mumbai-Ahmedabad bullet train, upcoming Metro lines, and coastal road in Mumbai is set to enhance connectivity in the Vasai and Virar belt. This is anticipated to have a positive impact on residential sales in the area by 2025. The average price per square foot in the Vasai and Virar belt is approximately Rs 10,000, with rents for a 2 BHK apartment ranging from Rs 10,000 to Rs 20,000.