Friday, June 29, 2012

Mumbai's tossed-out tenants become overnight millionaires

Several tenants in Mumbai who are paying US$20 (S$26) or less for a month’s rent are becoming millionaires as developers tear down old colonial mansions (pictured) to construct luxury towers for the rich.

Built as early as the 1900s, there are around 500 crumbling buildings in South Mumbai and along a stretch of prime land near the Arabian Sea that have a potential redeveloped value of about US$40 billion (S$51.01 billion), said Pujit Agarwal, Managing Director at Mumbai-based developer Orbit Corp.

“For generations, most tenants were living a hand-to-mouth existence, barely making ends meet,” said Agarwal, whose company is one of around 75 firms seeking to oust the rent-controlled residents.

“Now, with redevelopment, these tenants have become multi-millionaires overnight as capital values of the properties they occupied soared.”

According to Liases Foras Real Estate Rating & Research, housing prices in Mumbai have doubled in three years to reach US$200 psf (S$255 psf).

Mea Kadwani, one of the beneficiaries, received US$2.5 million (S$3.18 million) from the developer after three years of negotiations and decades of paying rent.

However, other tenants face tougher situations. Mitul Bhatia, a 33-year old recruitment consultant and his parents were forced to leave their 972 sq ft, three-bedroom apartment in South Mumbai after the developer turned off their electricity and water supply.

Even though blocked drainpipes caused leaks and a short circuit in the building, they stuck it out until he became infected with malaria in 2009.

In order to recover from his illness and worried about his elderly parents, they accepted the offer for a fifth of the market price.

“We got very little in the end, way below market rate...Prices to buy were too high in the same area and what we got from the landlord was too little,” he said.

View the original article here

Source From Property Guru

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