What’s the role for buy-to-let home buyers in India’s urban #housing markets? #rentals
Several questions on housing have been plaguing me. And because my current work engages with housing only tangentially, I find myself background thinking a lot of issues related to housing security, real estate markets and the nature of home ownership. The role of rentals in the housing market is something I’m rather excited about. So today’s question draws from the debate on in the UK about the growing role of buy-to-let home buyers. What’s the scenario in India?
We do know that speculative property purchases are on the rise in India. Notwithstanding the current slowdown, the post-liberalisation era has meant that favorable home loans terms and rising incomes have combined to put real estate into that sweet spot; real estate purchases have become a normal component in the portfolio of salaried urban Indians. Most of these investments are in second (or third) homes. Yet, there is the rise in the rental housing supply is not proportionate and we do know that a large number of houses in cities are lying locked up (ref: 2012 MoHUPA report on housing, which recommended push for rental housing).
Is there a larger role for buy-to-let home buyers in the Indian context?
Unlike the UK, Indians cannot avail of a buy-to-let mortgage, which are suited specifically for properties where rental incomes are more than the monthly installments. However, Indians do take out regular home loans to buy properties specifically for rental purposes. Though archaic rental laws are usually blamed for the slowness of rental markets, it is also true that speculative buying largely includes suburban properties that yield lower rents. The thrust of speculative housing investments has been the lure of higher returns through sale, not through rentals, which are relatively weak. Further, property management for rentals is not yet a well developed aspect of the real estate services industry and the responsibilities of being absentee landlords are daunting indeed.
Beyond one-upmanship: Global rankings can offer insights for Indian cities to attract business- June 25, 2012
Yet another ranking, this time its an Economist Intelligence Unit (EIU) report supported by the Citigroup that ranks 120 cities worldwide for their “demonstrated ability to attract capital, business, talent and tourists,” says a First Post news article today.
Although in India, Delhi’s snub to Mumbai was the only bit that got the headlines, I chose to see the report in a slightly larger perspective. Unsurprisingly, cities in Europe and North Ameria fared really well in the rankings. The top 10 spots were taken by the usual suspects- New York, London, Singapore, Paris and Hong Kong (jointly fourth), Tokyo, Zurich, Washington, DC, Chicago and Boston.
However, Asian cities actually grabbed 15 out of 20 spots under the ‘economic strength’ category. Bangalore ranked 16 and Ahmedabad 19 in this category. On most other counts, however, Asian cities and certainly Indian cities performed abysmally. The categories were economic strength, financial maturity, institutional effectiveness, physical capital, human capital, environmental and natural hazards, social and cultural character and global appeal. Aspects like physical and human capital, financial maturity, global appeal and institutional effectiveness clearly need a whole lot of attention if Indian cities are to get on the global competitiveness bandwagon. On financial maturity for instance, Mumbai ranked 33, while Delhi and Bangalore ranked equivalent of 68; even India’s top cities were way down!
On some other categories, I wasn’t so sure what the ranking meant. For instance, that Ahmedabad would rank equivalent of 103 in social and cultural character really demand some thinking on what the parameters and objectives for evaluation are. Also, where are our cities, even those with some identity, slipping up?
Indian cities rank as below on the Hot Spots ranking:Delhi- 68, Mumbai-70, Bangalore- 79, Ahmedabad-92, Pune- 97, Hyderabad- 98, Chennai- 105, Kolkata- 106.For complete results, look here.
Its easy to turn a cynical eye at rankings, in a world where they seem to bring out one everyday. However, benchmarking methods like rankings hold up a mirror in front of economic regions (cities, regions, nations, whatever is the context) to make comparative analysis, identify weaknesses and target improvements in the future.
For instance, Delhi ranks 48 in global appeal as compared to Mumbai’s 67 and Bangalore’s 103. Now that is something to think about!
Musings on a train: Reflecting on the urban-rural relationship Feb 10, 2012
What is it about train journeys that makes you think about life, goals, ambition and experience? Especially a daytime journey. Watching the fields whizz past. Wondering if rural life is even half as idyllic as it looks from a speeding train. And then inevitably thinking of your life, where its going and where you are taking it.
People around me, who probably travel often, are snoring and chattering. For me, travel will always be linked to introspection.
The flat landscape of the Gangetic plain evokes images of contentment and plenty as God intended it to be when he created a land of fertile soil, sunshine and a natural irrigation system of beautiful rivers and seasonal streams. In reality, the flatness represents the dull sameness of each day as it passes, each sunrise bringing little hope of change, let alone positive change.
As I glide through the Uttar Pradesh I grew up in, the UP that is right now going to vote, I think back at childhood journeys. Today most villages we pass are made of brick and mortar homes whereas the village of my childhood was a collection of thatch and semi pakka huts. (Ironically they looked better finished, had a certain aesthetic as compared the straggly brick dwellings I see today.)
Anyhow the point I’m making is that change has come, albeit very slowly. From our urban perspective where we change phones every other year and shop at nearly every end of season sale, the pace of change in rural life is negligible. Yet the new economy brings the awareness of choices and that’s what makes life frustrating for rural youth. To know that there is the possibility of a whole new life even as you stare anxiously at the sky, knowing that one good rain is what stands between you and a pakka roof!
An article in Mint today says that Jaimesh Ramesh is claiming that the MNREGA has reduced the incidence of distress migration. If that is true, I am heartened. Passing by mofussil towns, garbage overflowing their open drains, I find myself in a cynical mood. How do politicians dare to ask for votes when even the most basic needs of people are not met? How will migration mean better opportunities if our mofussil towns see no investment and growth? Its obvious our metros are sinking and migration adds to the stress. And is stemming distress migration via government dole outs sustainable when there is inadequate commitment to creating a real and sustainable rural economy?
We city dwellers would do well to constantly remind ourselves of how closely our lives are interlinked with the rural. It isn’t someone else’s problem what happens in India’s villages. It’s ours too!