Soaring Rental Prices Outpace Salaries in India’s Financial Capital

Mumbai has earned the notorious title of one of the most expensive cities in India for accommodation, with average annual rental costs for a 1 BHK apartment hitting ₹5.18 lakh. This figure starkly exceeds the average annual salary of junior-level employees, which stands at approximately ₹4.49 lakh, according to a recent report by CREDAI-MCHI, the apex body of real estate developers.

The report raises alarms about the potential for a ‘brain drain’ in Mumbai, as professionals grapple with the financial strain of high living costs and are increasingly compelled to seek stability in more affordable cities.

Comparative Costs: Mumbai vs. Bengaluru and Delhi-NCR

In stark contrast, the average annual rental costs for a 1 BHK apartment in Bengaluru and Delhi-NCR are nearly half that of Mumbai, with figures around ₹2.32 lakh and ₹2.29 lakh, respectively. The average salaries in these cities also present a more balanced picture: ₹5.27 lakh in Bengaluru and ₹4.29 lakh in Delhi-NCR. This disparity highlights the significant financial challenges faced by Mumbai residents, who often find their disposable income severely impacted, limiting their ability to cover basic living expenses.

Mid-Level Employees Feeling the Financial Strain

The report reveals that mid-level employees in Mumbai are particularly vulnerable, spending nearly half of their salaries on housing. With an average annual salary of ₹15.07 lakh, these professionals renting 2 BHK apartments allocate about ₹7.5 lakh annually for rent. Comparatively, mid-level employees in Bengaluru, earning an average of ₹16.45 lakh, pay only ₹3.90 lakh for similar accommodations, while those in Delhi-NCR, earning ₹14.07 lakh, spend approximately ₹3.55 lakh.

This financial burden leads to significant lifestyle constraints. Many mid-level professionals are forced to spend considerable time commuting due to their search for affordable housing, negatively affecting their work-life balance and overall productivity. The rising cost of living not only hampers their ability to save but also limits their options for better housing, as outlined in the CREDAI-MCHI report.

Senior-Level Employees Seek Affordable Alternatives

The situation is no less grim for senior-level professionals in Mumbai, who earn an average of ₹33.95 lakh annually. These individuals typically rent 3 BHK apartments, spending around ₹14.05 lakh on rent each year. In contrast, their counterparts in Bengaluru earn ₹35.35 lakh and pay ₹6.25 lakh, while those in Delhi-NCR earn about ₹30.73 lakh and spend ₹5.78 lakh on similar accommodations.

This significant rent-to-income ratio has led many senior professionals to consider migration to cities with more affordable housing options. The trend is driven by a desire for a better quality of life and higher disposable incomes, which may ultimately contribute to a ‘brain drain’ from Mumbai. Such a shift poses a threat to businesses in the city, potentially hindering their ability to attract and retain top talent, thereby impacting competitiveness and growth.

The Premium Real Estate Market: A Major Concern

The CREDAI-MCHI report further underscores the alarming disparity in real estate costs, noting that the premiums paid by developers in Mumbai are exorbitantly high—25 times more than those in Delhi-NCR, 50 times more than in Hyderabad, and 47 times higher than Bengaluru. For instance, developers in Mumbai face an average approval cost of ₹54,221 per square meter, compared to just ₹2,166 in Delhi NCR and even lower in other cities like Chennai, Bengaluru, and Hyderabad.

This escalating cost structure raises concerns about the sustainability of Mumbai’s real estate market and the implications for residents and businesses alike. As rental prices continue to soar, the potential for an exodus of skilled professionals looms large, challenging the very foundation of Mumbai’s status as India’s financial capital.

A Call for Action

The findings from the CREDAI-MCHI report serve as a wake-up call for policymakers and stakeholders in Mumbai’s real estate market. Addressing the affordability crisis is crucial not only for retaining talent but also for fostering a vibrant, sustainable economy. Without meaningful intervention, Mumbai risks losing its most valuable asset—its people.