Monday, July 10, 2006

India's "Real" & "Surreal" Estate Market Boom

...between Feel-Good and Feel-Numb...

The real estate market in India is reported to be booming.

The Feel-Good news is, for instance

  • According to IBEF (India Brand Equity Fund), India is on the radars of all international investors in this sector: American International Group Inc (AIG), High Point Rendel of the UK, Edaw-US, Japan's Kikken Sekkel, Lee Kim Tah Holdings, Dubai-based Emmar Properties and Cesma International from Singapore, Azorim Investment from Israel, etc. etc.

  • According to a PHDCCI study, the Indian construction industry will grow into a $180 billion sector by 2020 from its present size of 50 billion dollar.

  • According to a 2005 Business Week article (aptly titled, Indian Land Grab): "India's property markets are in a frenzy, driven largely by the rapid expansion of its information technology industry and the simultaneous growth of its middle class... In 2004 developers erected 18 million square feet of commercial buildings in India. This year 23 million sq. ft. of new space will come on the market, and by 2009 the number will rise to 50 million, according to global real estate services provider Cushman & Wakefield.", etc..

    etc. etc....

    Existing side-by-side to this boom - for want of better term, I call it "sur-real estate market" - which is not so much in the eyes of the feel-good media/ investors/ public... maybe, even government.

    In India, there are also many villages which have been put up for sale by their inhabitants.

    Some snapshots of Villages for sale:

  • Malsinghwala (Punjab): "The village, which owes whopping Rs 160 million ($ 3.7 million), is one of the largest cotton producing villages in the seven districts of Punjab, a major cotton producer in the country.... The village with a population of about 4,000 has 1,800 acres of cultivable land, out of which 750 acres remain barren due to the insufficient water for irrigation."

  • Dorli, Lehegaon and Shivni Rasulapur (Vidarbha region): "Farmers are no longer able to survive off the land. Every day, local newspapers report at least two cases of suicide by farmers. Since June 2005, 309 farmers have killed themselves, unable to bear the pressures of huge debts, grim poverty and loss of self-esteem (incidentally, in these villages one can also scout for "kidneys for sale")

  • Shivani Rekhailapur (Maharashtra): The banners read: "This village is ready to be auctioned. Permit us to commit mass suicides."

  • Seebkatte, Megaladoddi, Chikkarasanahalli, MG Palya and Putterasanadoddi: "There are no ‘For Sale’ signs around Seebkatte village. But that’s probably because the villagers don’t know the protocol for land sale. Still, the villagers’ intention to sell is clear. Earlier this month, five adjacently located villages... announced that they were going up for sale. The village heads are brainstorming to fix a price on the land... Stone quarrying and mining is a new-found industry in Bangalore’s rural district. “Stone quarrying started in this area five years ago. Already, there are over 70 mines in the district,.. Post-mining, village life is not the same as before,”... For one, the village folk don’t sleep to the sounds of owls and crickets any longer. Heavy-duty rock blasting begins after sunset...The villagers also claim the rock blasting is causing cracks in their houses.... About 25 houses in Seebkatte — whose total population comprises 48 families — have developed cracks.

    One can keep on compiling the list... eitherways...

    But it takes me back to my ealier Feel-Numb concern:

    Is There a "Suicide" in Our Food?


    Supratim said...


    It is amazing to me that you can write so many pieces about rural poverty and still think that "socialistic" (for the want of a better word) policies will do the trick. How is it that you do not make the connection? It is these policies that have created these problems.

    Consider the following:

    1. The government is bankrupt. It can only do more social work by raising more debt. This causes interest rates to rise, squeezing the poorest the most. It also causes inflation to rise also causing the poorest the greatest hardship
    2. So, the govt needs to raise more revenues? How? Increase taxation? We already have some of the highest tax rates in the world, compared with the infrastructure/law&order provided by the govt. So, evasion will increase if you increase taxes. Spread the net wider? Sure, but how do you get the babus to pay tax on their illicit incomes? Reduce your stake in profit making PSU's from 90% to 51%? hahahahaha. Increase productivity? Where? And, here comes the nub ... it is only the private sector that has been increasing productivity. So, we should increase the sphere of their operations, right? Hahahahahaha. So, the govt basically has to hope that that will get increased revenues despite doing nothing for the environment.
    3. At independence, some 300mn odd people lived off the land. Today some 750mn people live off the same land. Green revolutions and irrigation can only do so much. After all, it is impossible to increase land productivity by 3x and 5x, right? We can increase the productivity by maybe 1.5x through genetic crops, cooperative farming (bigger fields, corporate farming, right? So, do you think your NGOs will allow this? Hahahahhaa
    4. So, then the solution is greater urbanisation. More people need to move to the cities, where hopefully they will benefit from private enterprise. But, does the govt even allow this efficiently? No, we have archaic land control laws so that only the politicos can decide who gets what .... rent control act, UCLA, FSI, you name it, you got it.

    This why farmers will continue to commit suicide becuase the leftists who presume to speak for them are driving them to it.

    So, why do you write this pieces? After all, it is YOUR government and your policies that are responsible.

    Eat your food now.


    gaddeswarup said...

    Some of Supratim's comments sound sensible to me. Perhaps, he can give a more detailed analysis or references to the ideas he mentioned, and perhaps some idea of forecasts in numbers.

    Supratim said...

    I am not sure which ideas you mean, and what forecasts you are looking for? The number for disinvestments is available publicly, as are the numbers for rural population. If you explain, I will try my best to provide the data.


    gaddeswarup said...

    For number 4) in the first comment. This is what some others have been suggesting. What sort of urbanization? New centres? What industries? Small scale or large scale? What proprtion? What pace? Are there specific examples from which one can learn? I read somewhere that in Tamilnadu, 54 percent population is urban? Does this provide some sort of example?
    I live outside India. If the information and ideas are available on the internet, that would be great. I am just trying to find out these things out of interest. I do not have any specic ideologies or programmes. I am a retired mathematician and do not have much expertise in these things. But I would like to know because I have to vote and I feel that the problems in different countries are connected.

    gaddeswarup said...

    Just noticed this:
    See page 60. The commision is also inviting comments. Perhaps, you can also send comments to them.

    Supratim said...

    I am unable to get to the link that you posted, but will try again later.

    RE: your prev questions.

    In "developed" nations, cities typically account for over 70% of the total population and over 90% of the total employment, which is what I meant by urbanisation. It is the next step, post industrialisation.

    What centre? I don't know, and I don't care. If things were left to themselves, towns would develop by themselves. You should not have to decide as to where you would set up a new town or which town you would incentivise. Local authorities would be able to do that adequately.

    The problem is our antiquted laws - rent control acts, land ceiling acts, etc which do not make for efficient markets and make real estate expensive. Do you know that the cost of a house is more expensive in Bombay than in S'pore? How can you explain that given the disparities in per capita incomes of these two cities.
    The reason is that the politicians have made land into a scarce commodity, which only they can deal with. hence, the artificial prices.

    You ask what industries? My answer is I don't know. Unleash the cities and businesses will expand or set up automatically .... You don't need to plan this. Our people are creative enough to figure out where the demand/supply imbalance is. Today, the single biggest employer in Bombay is retail/hospitality. Could anyone have predicted this 5/10/20 years back? So, how you could have planned for it? And, retail employs the lower "blue-collared" workers in large numbers. So, even the marxists should have been pleased. But, ungrateful wretches that they are, they continue to oppose the expansion of organised retail.

    Pune is developing into a big education cum IT hub. It was always big in education, but now IT is starting to compete with Bangalore. All the Maharashtra govt did was to free up land and demarcate an area where industries could set up. That was all .... industries came when they saw a receptive place.

    Ah well ..... I can go on and on about how over regulation harms and hinders but what is the use. Under the current govt, we are again sliding back into the dark ages.


    Anonymous said...

    Hello I want to congratulate to you. This site is fantastic, looks like entertained and very good to me it elaborated. I invite them to that they explore a little on my site of the Web
    Our real estate listing includes great opportunities on Costa Rica Central Valley’s provinces such as San Jose, our Capital, with remarkable cities as Escazu at the west, or Curridabat at the east, experiencing a great development on both commercial and residential properties, making their real estate pricing highly attractive to investors; on other hand, Alajuela city gathers places with a very special warm weather such as Grecia, La Garita and Atenas, or beautiful farms for agricultural, cattle or nature preservation purposes as those located on San Carlos or Sarapiqui. We also offer land properties in Guanacaste, which is the province, along with Puntarenas, with the most beautiful tropical beaches on the Pacific Coast such as Tamarindo, Playa Grande, El Coco, Playa Hermosa, Nosara, Samara, Herradura, Jaco, Manuel Antonio, Dominical and Golfito, where the real estate business occupies the first place as the local economic activity.
    Great investment opportunity at Costa Rica Pacific Coast, Preconstruction condos in costa rica
    Condo sales in costa rica, Retirement property in costa rica. Visit us for more info at:

    Katherine said...

    It seems me very interesting your page has very good you photography and seems me very important the informacion that emphasizes. It like is cool. You can visit my page... Costa rica real estate , this about the travel in Costa Rica, you can see diferents beaches and beatiful places that you will go with you family and friends, and you can find information about condos too...for more info please go at

    Anonymous said...

    this report is fantastic, the infomation you show us is really interesting and very important. Do you want to see something more? you can visit too:

    Great investment opportunity in Costa Rica: jaco beach real estate, map jaco beach, hotel in jaco beach costa rica. Visit us for more info at:

    Diana said...

    Fidelity Investments is a group of privately held companies in the financial services industry. It is made up by two independent but closely cooperating companies, Fidelity Management and Research LLC (FMR LLC), founded in 1946 and serving the North American market, sportsbook, and Fidelity International Limited (FIL), spun off in 1969 to provide investment products and services to clients outside the Americas. Fidelity Investments includes a large family of mutual funds, their distributors and investment advisors, and a retail brokerage, as well as unrelated businesses.

    Omar Cruz said...

    These articles are fantastic; the information you show us is interesting for everybody and is really good written. It’s just great!! Do you want to know something more? Read it...:Great investment opportunity in Costa Rica: costa rica retirement homes, costa rica retirement tours, costa rica. Visit us for more info at:

    kimberly sayer said...

    A booming economy and crumbling trade barriers make India a destination for politicians and executives from other countries. The crowd of visitors, often in their first visit, be seen in the streets, but there are also companies looking to expand their existing operations here.costa rica fishingAll hope to sign agreements, find local partners, sell their products or simply observe the contradictions that characterize the world's largest democracy, a unique fusion of chaos and opportunity.

    Anonymous said...

    The term boom and bust refers to a great buildup in the price of a particular commodity or, alternately, the localized rise in an economy,Costa rica tours often based upon the value of a single commodity, followed by a downturn as the commodity price falls due to a change in economic circumstances or the collapse of unrealistic expectations.

    Anonymous said...

    Whale Watching Costa Rica

    Costa Rica Weddings said...

    Costa Rica
    , Costa Rica
    Wedding Packages
    , Costa
    Rica Weddings All Inclusive
    ,Wedding In Jaco Costa Rica,
    Costa Rica Beach Weddings,
    Los Suenos Wedding,
    Jaco Costa Rica Wedding,
    Jaco Wedding Planner,
    Costa Rica Married,
    Wedding Planning Costa Rica,
    Costa Rica Wedding Locations,
    Costa Rica Wedding Venues,
    Costa Rica Wedding Packages All
    , Costa Rica
    Wedding Planner
    , Getting
    Married Costa Rica
    , Costa
    Rica Destination Weddings

    Los Suenos Costa Rica,
    Los Suenos Costa Rica Condos For Rent,
    Los Suenos Costa Rica Vacation Rentals,
    Los Suenos Condos For Rent,
    Los Suenos Vacation Rentals,
    Los Suenos Condominiums,
    Los Suenos Condo Rental

    Costa Rica Weddings said...

    Rica Fishing Packages
    , Costa
    Rica Fishing Boats
    , Costa Rica Fishing,
    Costa Rica Sport
    Fishing Packages
    , Costa Rica
    , Costa Rica
    Fishing Packages All Inclusive
    , Fishing Trips Costa Rica,
    Los Suenos Costa Rica Fishing,
    Los Suenos Costa Rica Fishing Charters
    , Costa Rica Fishing Vacation Packages,
    Costa Rica Fishing Packages All
    , Costa Rica Fishing
    , Costa Rica Fishing Trips
    All Inclusive
    , Sport Fishing
    Costa Rica
    , Costa Rica Sport
    Fishing Charters
    , Sportfishing
    In Costa Rica
    , Jaco Costa Rica
    Fishing Charters
    , Jaco Costa
    Rica Fishing Packages
    , Jaco
    Costa Rica Sport Fishing