Mumbai and the impact of Rent Control

Mumbai was first developed on a series of seven islands which project out into the Arabian Sea.  Eventually these islands were connected so that now it seems seamless.   The city grew inland and now is populated by 23 million people.  While not the capital, it is the country’s main harbor, and chief commercial, industrial and financial centers.  There are over 1000 different dialects spoken in India and each state seems to have its own language.   English seems to prevail and is spoken by many and the primary language in all but the poorest schools.

One cannot help but notice the extreme contrast between very old, dilapidated buildings and smart, new tall ones.   It was explained to us that the primary challenge preventing development is rent control.  The present occupants of the old buildings inherited their space along with the controlled rent.  While they actually don’t own this space, they have gained rights through generations of occupation.   Eventually the building becomes condemned as it is no longer habitable.  (This doesn’t mean the occupants move!)  Then the landlord must go through an elaborate process of “buying/compensating” the occupants using a present day value.  This process takes years.   Eventually the building is emptied and either redeveloped or more frequently taken down and replaced with a brand new building.   The property owner eventually comes out ahead financially but this usually takes years!