India se (Singapore)
July 2007
GOING THROUGH THE ROOF?
By Ashali Varma
Gurgaon, India
Some years back when we were living in the US and looking to a buy a property, our real estate agent said, “The three most important things to remember while buying a property are location, location and location.” This turned out to be crucial in a country where property prices can go down. But back in India, it seems every piece of land is like the old Texas oil gushers—you have a stake and it’s bound to be worth millions and the incredible part is that the price keeps going up.
I suppose this is nothing special in a country of a billion plus people, where housing is in short supply and very little has been done by the government to address this issue. So now the big players are private sector companies and builders who have acquired large tracts of land in the suburbs of metros like Delhi and Mumbai and are going in for large scale developments of residential properties, corporate parks and malls. In addition, since there is very little land left to develop in Delhi, builders along with owners are breaking down old homes and adding value to already existing property by building more floors. In Delhi, today, you see four apartments, where there used to be a single storey home. In some colonies this creates a mess of jammed cars parked outside homes on roads that were meant to be just big enough for two-way traffic.
Just how great the shortage in housing is was brought home to me while we were still residing abroad. A Japanese friend of mine, Mitsuyo asked me for a list of good areas in Delhi where she and her husband could rent a place as they were being transferred to Delhi from Chennai. They were paying Rs 60,000 for a modern three-bed roomed apartment in Chennai overlooking a park and tennis courts and expected to pay maybe Rs. I50, 000 in Delhi. I dutifully listed out the areas from Defense Colony and Pancsheel to Vasant Vihar and Shanti Niketan, all the so-called good areas of South Delhi, where foreigners feel comfortable.
What happened next was a nightmare that took both of us by surprise. They went through several agents and saw perhaps a hundred apartments in the space of about two months. For every apartment, Mitsuyo said there were several foreigners lining up and some had bigger budgets. She said, “We would go inside to see a place and behind us were the French, Germans, Americans and so on.”
In one instance they found a place, paid the upfront fee and drew up a contract. The next day when they went to sign the landlord sheepishly informed them that he had got a better deal and they were out of the picture. When she told me, she was terribly upset and I was terribly embarrassed that this could happen in my country.
From the Pegasus Collection on Money, I subsequently learned the cost of living index in India. If you take the base of 100 for Delhi, than Mumbai is 144, Ahmedabad 88.2, Kolkata 76.7, Chennai 70.7 and Hyderabad 53.6. For Non-Resident Indians wanting to come back to India either to retire or work this is a good indication of where one should live or even what salary one should demand in the corporate world.
Rohini Chaudhri, a realtor who has been working in South Delhi for ten years, said,
“South Delhi offers a good standard of living and properties here have appreciated in value considerably in the last two years. This is because of a shortage of supply of residences and an increase in demand due to the interest in India. A number of foreign companies are coming here and most foreigners want to live in South Delhi.”
Her advice to NRI’s wanting to rent properties here is to get their companies to lease the property for them as landlords prefer this to individual leases. For the rentals prices vary from Rupees three lakhs a month for apartments between 2,500 to 3,000 square feet in Vasant Vihar and Anand Niketan to about two lakhs for approximately 2,000 square feet. People who want to buy can expect to pay as much as four and a half crores for about 2,000 square feet to seven and a half crores for about 3,000 square feet.
Rohini feels that the prices will continue to escalate in these areas though at a slower pace as there was a big jump in the last two years. “Currently, also, due to the ambiguity caused by the 2021 Master Plan for Delhi, the entire scenario has been a little uncertain. This has led to buyers holding back to see the outcome and also builders wanting to wait and watch before going into construction,” she added.
According to her the hot spots for both residential and corporate properties are in the suburbs like Gurgaon and Greater Noida. Here the rents are lower and because high rises are allowed there is more available.
Big building corporations such as Ansals, Unitech, DLF and Mahindra Gesco are all major players in the suburbs but a number of joint ventures with foreign partners are also coming into play. People are looking for better finished and posh apartments with all the amenities like 24 hour power, security and a club house.
However, the local governments also have to do there part and even though NRI’s coming back to stay in India will see a huge improvement in the quality of housing, there is much to be done on the infrastructure side such as good roads, parks, adequate power and water supply. In this area India is far behind other cities in developing countries. Unfortunately, as far as infrastructure is concerned India seems to be playing a catching up game and progress is slow.