MUMBAI: Contrary to expectations, the rental pressure in Mumbai remains high despite the ongoing redevelopment initiatives that began post-pandemic, with numerous new towers emerging to increase housing stock. In fact, the situation has worsened. As housing societies continue to sign redevelopment agreements, the actual availability of rental units has declined, causing rents to rise instead of stabilize.
In Khar West, a housing society entered a development agreement two years ago, offering members alternative housing at a rate of Rs 140 per square foot per month. However, construction delays meant that members had to vacate recently, only to be faced with current market rates of Rs 250 per sq ft per month, forcing them to cover the difference from their own pockets.
Market sources indicate that developers are hesitant to adjust rents as the agreements were made two to three years ago under different market dynamics. In areas such as Bandra’s Carter Road, Pali Hill, and Union Park, the increasing demand for around 150 two and three-bedroom apartments, due to several societies facing redevelopment and eviction notices, has led to rental increases of 10 to 20%
“Once evictions occur, it becomes incredibly challenging for members to secure flats at the rental rates stipulated in their agreements. Many may have to pay significantly more out of pocket,” stated property consultant Ashok Narang. “This trend is becoming commonplace across Mumbai and is likely to persist for the next 3–4 years due to continued constraints on rental housing supply during redevelopment phases,” he added.
In Bandra Reclamation, Jayant Sanghvi, whose building is currently undergoing redevelopment, has moved to a rental property in Goregaon. He noted that the monthly rental of Rs 57,000 set by his developer left him with no choice, as comparable options in Bandra were unavailable at that price.
“Current discussions about Mumbai’s rental market are closely tied to the rise in redevelopment activities. A significant factor is the heightened rental compensation now being sought from developers by societies undergoing redevelopment. Builders seem willing to meet these expectations, backed by confidence in the revenue potential of new projects,” said Gulam Zia, senior executive director of research, advisory, infrastructure, and valuation at Knight Frank India.
He added, “This trend has effectively reset rental price benchmarks in various micro-markets, with landlords finding tenants willing to pay higher than what current occupants are charged. However, a thorough review of the market reveals that only about 8% of total rental transactions and agreements are linked to properties currently in redevelopment.
According to a Knight Frank report, between 2020 and 2025, 44,275 apartments in Greater Mumbai were rented out, of which 32,353 are located in the western suburbs, where redevelopment is most prevalent.
Five years ago, a 3 BHK in Bandra, Khar, or Santacruz could be rented for Rs 1.5 lakh. Today, that figure feels outdated. “Now, a 3 BHK goes for no less than Rs 2 lakh. If a client approaches us with Rs 1.80 lakh or 1.90 lakh, we can’t assist them,” said real estate broker Lalit Lakhani, who has been conducting rentals and sales in the area since 2002.
A 1 BHK in a decent new building now commands a rent of Rs 1.10 lakh, which used to be available for Rs 45,000 to Rs 50,000. In older buildings, a 1 BHK can go for Rs 75,000 to Rs 95,000, often without amenities like elevators. Lakhani attributes this increase directly to the wave of redevelopment reshaping much of the neighborhood.
With no available plots left, “developers have no option but to redevelop older structures. Residents are becoming discerning, comparing offers from multiple developers to secure the best rental terms, corpus benefits, and additional area. They’re achieving remarkable rental rates from these developers,” he said. This trend has fostered a “hyper-inflated market environment.” As a result, flat owners have become increasingly expectant, prioritizing higher rents.
When asked who pays these inflated rents, he responded, “Seventy percent are residents from the same locality whose homes are being redeveloped. Then there are corporate clients getting transferred. They’ve become savvy, requesting properties in Bandra East instead of West, but realistically, prices are nearly identical; 3 BHKs in the East also go for around Rs 2 lakh.”
Even with rising rents, the standard of accommodations has not improved. “Nothing has changed,” he noted, when asked if landlords now include amenities like wardrobes or modular kitchens. “The rental conditions remain as they were five years ago. Some landlords won’t even paint the property after setting such high rents.” Lease terms remain standard, typically spanning two to three years with one to two-year lock-in periods. Redevelopment clauses are now commonplace. “It’s a standardized approach now,” he commented.
“Despite the lock-in terms, if a building is set for redevelopment, we provide a notice of three to four months. This is included in every rental agreement.” The rise in rents has concurrently pushed up sale prices, moving from a rent-to-sale price ratio of Rs 80,000 to Rs 1 lakh to a current Rs 1.40 lakh to Rs 1.50 lakh, leading to sale prices climbing to Rs 4–5 crore.
