Makaan.com: It is better to rent vs. buying property in Mumbai
A property seeker in Mumbai is confused between opting for a rented accommodation or giving that rental amount as EMI for buying a house. In the absence of a robust and reliable tool, these decisions were traditionally taken with gut feel or with the guidance of a close relative / friend, leaving scope for error. The latest report from Makaan.com recommends Mumbaikars to stay on rent rather than buying the property. The Makaan.com Buy Vs Rent index (MBRI) for the period January to March 2011 has been released with some interesting findings. MBRI is a tool that aims to help property seekers make an informed choice between buying and renting of property in top Indian cities/ sub cities.
When it comes to Mumbai, the city is divided into 8 sub-cities and MBRI is calculated for each sub-city to enable seekers make informed choice in their respective areas of interest. Let’s look at some recommendations for buying Vs. renting property in Mumbai
Buying destinations in Mumbai
Typically if the MBRI for a city / sub-city is between 1-20 it denotes that it is much less expensive to buy a home than to stay on rental in these cities / sub-cities. Property seekers looking at investing here are advised to buy a property than staying on rentals. The current MBRI release does not identify any sub-city in Mumbai where the MBRI is in this range.
Neutral destinations in Mumbai
The sub-cities of Mumbai Thane and beyond, Mira Road and beyond and South – West Mumbai are neutral areas. These sub-cities have an MBRI of 21-25 which denotes that it is relatively more expensive to buy a home than to stay on rental, in these sub-cities. This is a neutral range and property seekers looking at investing here are advised to take the final decision based on their financial situation.
Rental destinations in Mumbai
According to the report, Mumbai sub-cities of Andheri – Dahisar, Mumbai Harbour, Navi Mumbai and Mumbai South are recommended for renting Vs. buying. These sub-cities have an MBRI value of 25+ indicating that it is much more expensive to buy a home than to stay on rental. Property seekers investing here are advised to stay on rental rather than buying the property.
Shift in Mumbai trends over past quarter
If one compares the current report with the previous report (released for the period October – December 2010), one observes that MBRI for sub-cities of Thane and beyond has dropped by 2 MBRI points. This indicates that rentals in these sub-cities have risen more than the capital values, making these sub-cities relatively less attractive for rentals. On the other hand the sub-cities of Andheri – Dahisar, South Mumbai and South – West Mumbai have seen a rise of 3 MBRI points. This indicates that capital values in these sub-cities have risen more than the rentals making it relatively more attractive to stay on rentals.
The MBRI was released for seven Indian cities. The MBRI for Ahmedabad (19), Bangalore (18) and Chennai (17) shows an overall preference for buying Vs. renting. MBRI for Pune (24) and Hyderabad (25) came out neutral territory and MBRI for Delhi NCR (28) and Mumbai (26) shows an overall preference for renting Vs. buying.
The MBRI for 7 Indian cities and their sub-cities for January – March 2011 is given in the table below
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Makaan Buy vs. Rent index is a quarterly initiative and will be updated every 3 months. The detailed findings can also be accessed at http://www.Makaan.com/MBRI