{"id":3291,"date":"2015-02-18T17:25:55","date_gmt":"2015-02-18T11:55:55","guid":{"rendered":"https:\/\/teekhapan.wordpress.com\/?p=3291"},"modified":"2015-02-18T17:25:55","modified_gmt":"2015-02-18T11:55:55","slug":"one-of-the-best-kept-secrets-of-indian-real-estate-is-out","status":"publish","type":"post","link":"https:\/\/vivekkaul.com\/2015\/02\/18\/one-of-the-best-kept-secrets-of-indian-real-estate-is-out\/","title":{"rendered":"One of the best kept secrets of Indian real estate is out…"},"content":{"rendered":"

\"India-Real-Estate-Market\"<\/a><\/p>\n

Vivek Kaul <\/span><\/span><\/span><\/p>\n

The Economic Survey for the last financial year<\/a> states: \u201cData shows that the first claim upon the savings of households is physical assets such as gold and real estate.\u201d
\nThat Indians love their ‘real estate’ would be like stating the obvious. But sometimes it is necessary to state the obvious as well. Why? That will soon become clear.
\nAkhileshTilotia, a thematic research analyst with the institutional equities arm of the Kotak Mahindra Group, makes a very interesting point in his new book <\/span><\/span><\/span>The Making of India\u2014Gamechanging Transitions. <\/i><\/span><\/span><\/span>As he writes: \u201cThanks to its love for real estate investments, India is in a curious position of having more houses than it has households.\u201d
\nThis becomes clear from the Census 2011 data. \u201cIndia’s households increased by 60 million to 247 million from 187 million between 2001-2011. Reflecting India’s higher ‘physical’ savings, the number of houses went up by 81 million to 331 million from 250 million. The urban increases is telling: 38 million new houses for 24 million new households,\u201d writes Tilotia.
\nSo what is happening here? One explanation for the number of houses rising faster than the number of households may lie in the fact that houses are being bought as investment and not to be lived in.
\nWhat this means is that many Indians own more than one house and then there are many more who do not own any, because prices are way beyond what they can afford. Further, given our penchant for owning real estate, a lot of real estate is being built sheerly from the point of view of fulfilling investment demand.
\nThe Caravan magazine in a 2011 article<\/a>, when real estate investment was at its peak, quoted Gautam Bhan, a consultant with the Indian Institute for Human Settlements, to make this point: \u201cThis economy is being built solely on speculation…These properties are being built solely for investment cycles. Why else would you build halfway to Agra? If you have ten businessmen who occasionally want to get rid of black money, you\u2019ll have an apartment building. These flats will be bought and resold and bought and resold. Nobody even needs to live there.\u201d
\nThis is the best possible explanation for why the number of houses has gone up at a much faster pace than the number of households.
\nFurther, those who have black money to hide, don’t bother much about the location of where houses are being built. And that explains why houses even miles away from India’s biggest cities are so expensive.
\nSo what is the way out of this mess? How can houses be built and sold at prices so that people can buy them to live in them? As I have mentioned more than a few times in the past, the government needs to actively go after the black money hidden in physical assets like gold and real estate. There is no point in trying to actively pursue all the black money that has left the country and not do anything about all the black money lying in the country.
\nA crackdown on black money will lead to better tax compliance, meaning more taxes for the government. Further, it will also bring down the amount of black money that goes into black estate. This is easier said than done and will need solid political will for many years, if it has to be pursued seriously.
\nFurther, it is high time that agricultural income be brought under the tax net. There is no reason that rich farmers should not be paying income tax. In fact, in cities like Shimla, Chandigarh and even the National Capital Region, all the untaxed agricultural income chasing real estate has also been responsible for driving up home prices, among other things.
\nEnsuring affordable housing becomes available at a large scale level should be a major priority for the Narendra Modi government. As the Economic Survey points out: \u201cNearly 30 per cent of the country\u2019s population lives in cities and urban areas and this figure is projected to reach 50 per cent in 2030.\u201d If affordable housing does not become the order of the day slums will become as common place in other cities, as they are currently in Mumbai. And that is not a happy thought to look forward to.
\nAlso, as Tilotia points out in his book, <\/span><\/span><\/span>\u201c<\/span><\/span>more than three-fourths of urban residents live cheek by jowl in cramped spaces.\u201d This basically happens because of two reasons. The first reason is the low FSI ratio which has made land very expensive. The second reason is \u201cthe inability to commute cheaply and quickly, which means that people have to congregate in and around areas where they can find economic activity and public infrastructure.\u201d
\nIf affordable housing has to take off, all this needs to be set right. <\/span><\/span><\/span><\/p>\n

(Vivek Kaul is the author of the <\/span><\/span>Easy Money <\/i><\/span><\/span>trilogy. He tweets @kaul_vivek)<\/p>\n

The column originally appeared on www.firstpost.com <\/a>on Feb 18, 2015 <\/span><\/span><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Vivek Kaul The Economic Survey for the last financial year states: \u201cData shows that the first claim upon the savings of households is physical assets such as gold and real estate.\u201d That Indians love their ‘real estate’ would be like stating the obvious. But sometimes it is necessary to state the obvious as well. Why? … <\/p>\n

Read more<\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"qubely_global_settings":"","qubely_interactions":"","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[2,12,14,33],"tags":[203,637,1086,2994,3703],"qubely_featured_image_url":null,"qubely_author":{"display_name":"Vivek Kaul","author_link":"https:\/\/vivekkaul.com\/author\/vivekkaul\/"},"qubely_comment":1,"qubely_category":"Analysis<\/a> Books<\/a> Business<\/a> Firstpost<\/a>","qubely_excerpt":"Vivek Kaul The Economic Survey for the last financial year states: \u201cData shows that the first claim upon the savings of households is physical assets such as gold and real estate.\u201d That Indians love their ‘real estate’ would be like stating the obvious. But sometimes it is necessary to state the obvious as well. Why?…","jetpack_sharing_enabled":true,"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/vivekkaul.com\/wp-json\/wp\/v2\/posts\/3291"}],"collection":[{"href":"https:\/\/vivekkaul.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vivekkaul.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vivekkaul.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/vivekkaul.com\/wp-json\/wp\/v2\/comments?post=3291"}],"version-history":[{"count":0,"href":"https:\/\/vivekkaul.com\/wp-json\/wp\/v2\/posts\/3291\/revisions"}],"wp:attachment":[{"href":"https:\/\/vivekkaul.com\/wp-json\/wp\/v2\/media?parent=3291"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vivekkaul.com\/wp-json\/wp\/v2\/categories?post=3291"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vivekkaul.com\/wp-json\/wp\/v2\/tags?post=3291"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}