Mumbai is a city with population of over 20 million and a major proportion of this population constituted of a migrant workforce. Many will eventually return to their respective home states and cities. Moreover, a large segment of this migrant population cannot afford Mumbai's property rates.

Mumbai is expanding in a linear manner, towards the north. However, all major business activities are towards the southern part of the city, where residential prices are generally unaffordable. Hence, these segments do not choose to settle down and buy property in the city. This creates a huge demand-base for rental properties, since rentals in these parts of Mumbai are still affordable, from the mid-management level onwards.

Nevertheless, rental affordability is still an issue for end users in the more centralised areas of Mumbai. At the same time, the income on rental returns for property owners ranges from a mere 2.5 per cent to 3.5 per cent, annually, capital appreciation notwithstanding.

Outright ownership

Among the huge population base, there is always a component of people who seek to eventually own their own property. With more of the farther suburbs getting developed, there are always opportunities for this segment to enter the residential market at a relatively affordable level.

They will benefit from the inevitable price rises, as these areas develop, in terms of connectivity and social / general infrastructure. Therefore, there is also a perennial demand for owned residential properties, among those who can afford the capital outlay necessary to avail of the investment potential of Mumbai's high appreciation rates. Amenable home loan interest rates also serve to keep this demand at a healthy level.

The problems related to ownership property in Mumbai, are lack of general affordability, a high incidence of legal issues pertaining to clear titles, construction delays and lack of compliance to original development plans.On viewing all aspects of the rental versus ownership property issue, it emerges that the two demand typologies cannot be fairly compared against each other, since both represent very dynamic sides of the same coin. Mumbai's residential market banks heavily on both.