A house is more than just concrete walls and a roof. It is an investment in the future. However, with the increasing urban population, building a house in the metro cities has become challenging. Moreover, COVID-19 has had a neutral to significant impact on market benchmark rates across asset classes, especially in Mumbai, where the construction cost has significantly increased over a couple of years. According to an industry report, the average cost of constructing a house in Mumbai is over 14 percent higher than the other top six metro cities in India. Hyderabad and Chennai rank the lowest, with the average cost of construction being 14 percent lower than Mumbai.
Hence, if you plan to undertake residential construction in Mumbai, you should be aware of the development cost and all that goes into constructing a structure.
Know your neighbourhood well
Developmental regulations in Mumbai
As stated under the proviso of Section 43 of the Maharashtra Regional and Town Planning Act, 1966, for any development activity, you must seek approval from the municipal corporation, municipal council, or the Nagar panchayat under whose jurisdiction the land is situated. Moreover, the Act mentions that no authority will grant permission for any development which does not conform with the Regulations and the Regional Plan for Mumbai Metropolitan Region, 2016-2036. The restrictions for development in the ecologically sensitive areas under the Coastal Regulation Zones (CRZ) depend on the criteria such as ecological sensitivity, distance from the shoreline, and if it falls under a natural park or wildlife zone.
Furthermore, other regulations like the height of a building, minimum room size, refuge areas and parking are governed by the building bye-laws in Mumbai.
Main costs associated with building a house in Mumbai
The ever-increasing cost of land parcels plus taxes and government approvals for land surveys and plan approvals add to the construction cost.
Floor plan/layout
The cost of architectural, structural and mechanical, electrical, and plumbing (MEP) design is one of the major factors determining the construction cost. Once you have decided on the land and understood the regulatory norms, you need to select the floor plan (either customised or chosen). A floor plan is nothing but an architectural representation of the layout of the house. It is a pictorial depiction of the connection between spaces. When building a house, a floor plan gives you a full picture of how the house will look after completion. But this comes at a cost!
According to Rohit Jangid, Principal Architect, Rohit Jangid Architects, “An interior designer or an architect may charge close to Rs 20,000 for a 1,000 sq ft floor plan, which will only include the basic specifications like a 3D view of the home, external elevations and area statement depending upon the site and need of the client.”
Cost of raw materials
The quality of raw materials selected is an important factor in deciding the construction cost. Typically, raw materials are divided into three categories:
- A Class- Involves the best quality of construction raw materials, such as bricks, sand, cement, steel, fittings and fixtures
- B Class- Includes raw materials like bricks, sand, cement, steel and fittings that are reasonably priced
- C Class- Comprises low-grade bricks, sand, cement and steel, along with below-average fittings and fixtures
Civil and finishing costs
Constructing a home is often a one-time affair for most people. Hence, it would be better to consult an experienced architect to complete the civil works like plumbing, tiling, electrical works, flooring and finishing, which involves wooden works, grillwork and painting the house. However, an architect may charge 3-5 percent of the project expense. Moreover, civil works may account for 10-15 percent of the project cost, and finishing costs may take up 15-20 percent of the project cost. The cost of raw materials would be subject to the demand and supply trends in Mumbai.
Manju Yagnik, Vice-Chairperson, Nahar Group, and Senior VP NAREDCO (Maharashtra), avers that the construction cost in Mumbai, excluding the land cost, is pegged between Rs 3,000 per sq ft and Rs 3,500 per sq ft for a flat with basic amenities. Construction cost primarily includes the cost of raw materials like cement, reinforcement steel, structural steel, stones and labour, among others. The raw material and transportation cost is 50-60 percent of the construction cost, which has almost doubled in a decade. The cost of TMT bars (8mm to 32mm) used in construction has risen by approximately 160 percent and is priced at an average of Rs 52,000 per metric ton. These TMT bars were available at a rate of Rs 32,000 per metric ton approximately in 2011. The diesel price, which was Rs 44 per litre in Mumbai in March 2011, has risen more than 200 percent, touching Rs 96 per litre in August 2022. These have largely added to the cost of construction.”
The cost of constructing a house involves the quality of raw materials used along with the time of delivery and legal taxes, among others. Keeping these things in mind, the construction cost of a 1000 sq ft house can cost somewhere between Rs 45 lakh and Rs 50 lakh in Mumbai. Also, be particular about choosing the contractor. Ensure that the hired professional has huge experience and designs the space strategically within your budget rather than burning a hole in your pocket.
