If you have been following the boom in the Indian Real Estate sector then you know that this tremendous growth started off at first in the large Indian urban centers and it has now begun to spread to second tier cities.

Mumbai, the financial epicenter and the commercial capital of the country has witnessed a rise in prices of both commercial and residential property of nearly 300% since 2003. Not only have prices of properties gone up, rents in recent times have also sky-rocketed, so much so that young professionals who would have traditionally rented a property for a few years until they could climb on the property ladder are now adopting a new mantra - buy a property rather than rent one.

These couples who often have double incomes now prefer to pay towards a mortgage and acquire a flat in Mumbai’s rapidly growing suburbs like Malad, Borivali and Mira Road, rather than shell out astronomical rent in other areas of the city which are closer to the business districts. Even though the interest rates on housing loans have steadily risen from 6.5% to 11% over the past few years, these young couples still feel it is more prudent to pay a mortgage of a few thousand rupees a month and ultimately own an asset that will appreciate over time, rather than pay the high rents demanded by landlords in many areas of Mumbai.

Why are rents in Mumbai raising so rapidly?

Mumbai is the financial and commercial capital of India and many IT companies, Multi National Companies and International Banks have their headquarters in this pulsating, frantic city. As a result of this there exists a great demand for quality apartments in areas like South Mumbai and Central Mumbai, which are located in close proximity to main business center of Mumbai - Nariman Point. This demand for quality abodes outstrips the present supply and has made rents soar to more than Rs.250,000 ($6,250) per month for a two bed room apartment in a quality building in South Mumbai.

Top-end professionals from IT companies, multinational corporations and banks who work in Nariman Point like to live close to the business district rather than commute from elsewhere. Though the northern suburbs of Mumbai do have much more to offer in terms of quality of life, poor connectivity with South Mumbai and the crumbling infrastructure make the commute from North to South Mumbai an absolute nightmare. If the infrastructure were well developed, then these executives would have perhaps considered commuting from North Mumbai to their South Mumbai offices. As things stand, they compete actively for the few quality residences that are available for rent in South Mumbai and this drives up the rental prices.

Apart from these issues, living in South Mumbai is considered posh and this area of the city holds a status quite similar to New York’s Upper East Side or London’s Holland Park. This adds to the appeal for high-ranking executives and those who can afford the high rents.

A similar phenomenon has also been witnessed in the areas of Bandra, Juhu and Andheri, which are essentially suburbs of Mumbai because these areas happen to be close to the relatively new secondary business district of the Bandra Kurla Complex which is developing rapidly. This has caused rentals to go up in these areas as well. For instance rents for a two bedroom flat in Bandra have increased from Rs.60,000 ($1,500) to over Rs.100,000 ($2,500) a month, while in Andheri a two bedroom now fetches a rent of Rs.35,000 ($875) a month and in Juhu, a two bedroom rents for about Rs.40,000 ($1,000). These rates represent a 100% increase since 2005. Besides being close to the business district of Bandra Kurla Complex, these three areas are also close to the international and domestic airports, which makes them attractive to many of the corporate executives who travel frequently.

Another factor that has been instrumental in driving up the rents in Mumbai stems from the archaic tenancy laws that completely favor the tenant. Unless the Indian government undertakes major law reforms in this regard, several prime properties in South Mumbai will continue to remain in the possession of tenants who continue to pay rents at 1940 rates. Due to the ridiculous rental amounts the landlords of these buildings are earning, they do not bother to maintain these buildings as they don’t get adequate revenue from their properties.

So unless infrastructure in Mumbai is improved in the near future and the tenancy laws are radically reformed, rents in the coveted areas of Mumbai can be expected to continue to rise as long as demand for housing continues to outstrip supply.

There’s great news if you want to listen to some hot property buying tips from the experts on your PC or even on the move. Phil Spencer, who co-presents Channel 4 and More4’s popular property TV programs, Location, Location, Location and Relocation, Relocation, along with presenter Kirstie Allsopp, has branched out into property podcasts that you can listen to online or even download to your iPod or other mp3 player.

Phil Spencer On The House is produced in conjunction with the Royal Institution of Chartered Surveyors (RICS). A well known and respected property professional, Phil talks to experts and shares his views, thoughts and experiences on a range of key issues relating to property buying. Aimed at everyone from first-time buyers to hardy property investors, the podcasts so far cover topics such as dealing with estate agents, renting, buying a property for the first time and buying a home.

The Phil Spencer On The House property podcasts can be downloaded and listened to free of charge and you can even subscribe to automatically receive all the new editions as soon as they are published.

According to the property podcasts FAQ, the way to download a podcast depends on your computer: “Windows: Right click on link and choose ’save target as’. Mac: Ctrl + click on link and choose ‘download linked file’.” What’s not too clear, though, is that the link you must click on is either the ‘Audio’ or the ‘Audio and Pics’ link. Also, to download a podcast from the archive you must have already clicked on the ‘listen’ link, so it loads on the main part of the page.

That aside, these podcasts are well worth a listen if you’re planning to buy or invest in property and want some hot insider tips. So check them out at www.philspenceronthehouse.com!