Buy A Bungalow In Bombay For Rs.5,400 Or The U.S. Dollar?
September 15, 2023
Bungalows in Bandra, Khar and other parts of Bombay could be bought for as little as Rs.5,400 in the 1930’s, according to this advertisement published in the G.I.P. Railway Magazine. At that time, you could also buy land in Bombay for Rs. 2 to Rs.8 per square yard. In the 1930’s, a Rupee was worth about $10.
The buyers could also secure loans from the local government to cover half the cost of a bungalow or three quarters of the cost of land. The loans could be repaid in monthly instalments over 15 years.
Besides business folks, some doctors and other professionals could also afford to buy the bungalows. In 1940, for instance, the annual salary of an officer in the Indian Civil Service was Rs. 13,000.
A bungalow in Bandra today. Painting by Charles de Souza
Today, there are very few bungalows left in Mumbai. In recent years, five bungalows in the city were bought by major business owners for prices reportedly ranging from $45 million to $90 million each. Currently a couple of them in Bandra West, much smaller than those five and listed for sale by a broker, are priced at $24 million and $54 million.
Based on the current prices, a family which holds onto a modest bungalow in Mumbai, bought in the 1930’s by their ancestors, have a 5,000-fold gain, a roughly 10% compound annual return. Of course, this is in addition to enjoying the benefits of living in the bungalow for generations.
However, given the 8% annual devaluation of the Rupee over the past 90 years, purely on an investment basis, buying and holding a currency like the U.S. dollar in an interest bearing bank account - annual interest averaging 5% - would have resulted in a 21,000 fold gain , four times greater than purchasing a bungalow in Bombay.
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