by Deepak Sawant 
Mumbai Real Estate is messy, profitable, emotional and endlessly fascinating. After years as an academic and now a developer, I have one clear view: this industry can create generational wealth and it can wipe it out. Here I pull back the curtain on how prices move, why builders act the way they do, where the smart bets are, and what the sector must fix if it wants to grow without burning people in the process.
Why people become developers: three blunt theories
Developers come from all walks of life, but three reasons explain most entries into the trade.
- Power and status — with monarchy gone, building gives people the closest thing to being a king again.
- Karma and grind — the work is brutally demanding; some enter to atone or because they are built for the grind.
- The acting bug — development is role play: you must perform differently for home buyers, bankers, contractors and authorities. If you liked acting, you might become a builder.
“You act in front of a home buyer differently. You act in front of the government differently… it is full action.”
The many faces of a builder
A developer wears at least ten hats. Each stakeholder needs a different pitch and tone:
- Contractors respond to on-site energy and urgency.
- Bankers want optimism, financial discipline and a growth story.
- Home buyers need reassurance about delivery and value.
- Authorities require explanations of how margins have been squeezed.
That constant switching is why developers are often misunderstood. It creates a life of improvisation where every meeting is a different performance.
Why Mumbai home prices rarely fall
Homes will not behave like consumer durables. The simplest way to understand prices is to look at inputs. A car might use 80 component industries. A home aggregates closer to 400 industries: paints, tiles, doors, electrical, plaster, logistics and so on. Each input is inflating, and each input owner wants margin.
“Instead of 80 industries, now you have 400 industries coming together to put up that product.”
Other structural reasons prices stay high:
- Emotional attachment. Many households treat property as their largest asset and sell only as a last resort.
- Land scarcity and excessive premiums charged by local authorities turn landed cost sky-high.
- Cluster redevelopments and branded locations create premium perceived value that buyers pay for, often willingly.
Best real estate investments in Mumbai right now
If you want a practical tip: buy old rooms in south Mumbai chawls and wait for cluster redevelopment.
- Chawls and century-old buildings are collapsing stock of land value. Cluster redevelopment unlocks huge uplift.
- Redevelopment gives existing society members more area or new flats and often multiplies original net worth by multiple times.
- Other strong plays: data centers and plotted land for alternative routes of investment where black money finds its way.
“Buy these rooms which are worth fifty lakhs and wait for the redevelopment — they’ll by default go into redevelopment.”
How redevelopment economics really work
Developers rarely pay the entire project cost upfront. Customers fund much of the construction through staged payments and pre-sales, so the developer’s peak cash flow requirement is a fraction of the project GDV.
Rules of thumb from the field:
- Developers often need to put in 25 to 30 percent of the project cost before first sale receipts start arriving.
- For a big project, peak developer cash might be 15 to 25 percent of the GDV. If you invest that peak cash, you should aim to get that amount back as profit. “If you invest 50 crores and you get 50 crores profit, that’s a 100 percent return.”
- Premiums, approval fees and municipal levies can amount to a large chunk of costs; sometimes premiums alone are a third of project cost.
So redevelopment can be immensely profitable on the right deal — but the risks, approvals and politics make it complicated.
Society politics, managing committees and the corruption question
Cluster redevelopment concentrates power in society managing committees. That power can be more decisive than many other stakeholders because land in Mumbai is scarce and societies control it.
On corruption:
- There is a difference between speed money and outright fraud. Speed money exists across sectors because approvals require scarce human bandwidth.
- Absolute scams have reduced thanks to RERA, digitization, RTI and social media transparency, but that does not mean corruption disappears overnight.
- Corruption can act as a perverse entry barrier — some people see it as protecting incumbents from excess competition.
“Corruption is good for real estate — because it is an entry barrier. If it stays, don’t enter.”
Black money: has it gone away?
Black money has not vanished, but its locus and incentives have changed.
- Developers who want to list on the stock market prefer larger declared sales and cleaner books. The lure of market capitalization makes some players declare more income.
- Black money is like water; it finds a course — land, plotted development, holiday homes and certain asset classes still soak it up.
- Crucial point: if black money circulates within the country it can fuel economic activity, but the problem historically was money flowing out of the country.
“Black money is like water. It will find its course. I am not saying it will vanish out of real estate.”
Finance, NBFCs and how lenders profit
Lending geometry in real estate is often paradoxical and costly.
- NBFCs frequently borrow from banks to lend to developers the banks turned down. That arbitrage increases developer funding cost dramatically.
- Lenders can earn enormous sums in interest; there are stories where lenders earned more from a project than the actual developer partners.
- Worse is the sanctioned-but-not-dispersed loan: a bank sanctions large credit, takes processing fees, and then stops disbursing. That can sink a project and bankrupt even well-established promoters.
- The sector needs specialized capital frameworks or real estate-focused banks to reduce expensive intermediated finance.
“NBFC lends to the developer by borrowing from the bank to the developer whom the bank had said no. How does that logically work?”
Builders: how much do they make — and can they destroy wealth?
Yes, builders make a lot of money. But real estate is a double-edged sword.
- A developer can make massive returns because project sizes are huge; a single land unlocking can multiply net worth.
- At the same time, a badly chosen project, liquidity shortfall or regulatory shock can destroy generational wealth. The scale amplifies both outcomes.
- Average margin numbers are hard to generalize, but a working rule is: if your peak equity is X, you should aim to recover X as profit; otherwise the deal is questionable.
“We can build generational wealth. We can also destroy generational wealth which we inherit.”
Public perception: why people hate builders
The image problem is real. The caricature of the builder as a greedy, loud, gangster-linked figure persists. Part reasons:
- Developers have not run a coordinated image campaign to explain the value they create.
- There are too many associations and too little unified messaging; everyone wants to be president or chairman, which fragments influence.
- Stakeholders want to share rewards but rarely share risk. That asymmetry breeds resentment.
“Everyone wants to share the reward but not share the risk.”
Marketing, influencers, brokers and media
Marketing changed after 2020. Digital is now core; traditional physical outreach must be rethought. Three practical takes:
- Influencers can be powerful if engaged ethically; they bring research, reach and distinct perspectives. But many so-called influencers today are simply brokers doing comedy reels.
- Brokers are everywhere and often underqualified. The sector needs stricter licensing and standards for broking professionals.
- Real estate media and consulting must stay independent from transactions. Research diluted by brokerage creates bias and erodes credibility.
“Half of them are brokers doing standup comedy.”
Practical fixes developers and the industry must adopt
To make the sector more reliable and trustworthy, I recommend several changes:
- Be willing to say no. Do not over-bid or take projects that are not viable. Discipline beats opportunism.
- Run internal audits down to the smallest components. There are 400 inputs in a project; plug leakage and improve procurement to increase margins.
- Train front-line staff like airlines train cabin crew. Customer-facing employees must manage conflict and expectation professionally.
- Consolidate representative bodies so the industry speaks with one voice on policy and image.
- Push for specialized capital solutions or real estate banks to reduce costly NBFC arbitrage and avoid sanctioned-but-blocked lending.
- Use social and digital marketing intelligently; invest in genuine influencers who bring critique and credibility rather than pure sales hype.
Mumbai’s outlook: stable, branded and infrastructure-led
Mumbai is not a yo-yo market. It behaves like a large-cap stock: steady, expensive, and reliable. Infrastructure projects such as the coastal road will change commute dynamics and increase the effective spread of the city. That will benefit real estate across many micro markets.
Why prices remain high in Mumbai:
- Extremely high land values and the costs developers must bear in giving back area, rent, amenity and premium to landholders and societies.
- Municipal premiums and levies charged by the richest local authority in India add significantly to landed cost.
- Brand value of locations and projects creates perceived price premiums similar to luxury retail: buyers are willing to pay for the badge.
“You remove infrastructure and real estate from the equation and the country will collapse.”
Final candid notes
Real estate is less a secret and more an open game. Mumbai home buyers are unusually patient and accommodating. Developers must match that goodwill with better communication, discipline and transparency. The industry can — and must — evolve: cleaner books, fair financing, fewer scams, better marketing and a stronger sense of shared risk.
If developers, bankers, regulators and buyers move toward fairer rules and clearer accountability, Mumbai will continue to grow — and it will do so in a way that benefits more people than it harms. Until then, remember the most essential advice for anyone in this sector: learn to say no, do the math, and respect the scale of risk you take on.
