Mumbai’s Renters become Millionaires by Sam Kligman

http://www.businessweek.com/articles/2012-07-05/mumbais-boom-turns-renters-into-millionaires

It is common in India to have apartments with established rent protection because of the Bombay rent control act of 1947. Because of this, residents who have lived in the same place for several decades are now turning into millionaires as developers offer them large sums of money (the article cites an example of one couple pocketing $2.5 million from Orbit) to sell and vacate their apartment. The reason developers are so willing to do this is that certain areas in South Mumbai are projected to have a potential value of “$40 billion if redeveloped” according to Pujit Aggarwal, managing director at Orbit. This means that renters who pulled off the longest from being bought out usually get the greatest payoffs. As a business person, this begs the question – which areas will be next for development? If investors are able to predict this in the near future, I believe it is safe to bet that real estate investing will quickly grow and small player wins like the ones discussed in this article will fall. Moreover, if this is widespread, who’s to say India will not experience a similar housing bubble to the one taking place in China?

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