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.
Global #capital and the impending #housing crisis in India’s #smartcities
With the Indian government easing FDI norms in real estate and construction, the country’s large and ambitious real estate sector is hoping that an influx of global capital will up business. For a country that is looking to urbanize rapidly and is opting for a ‘smart cities’ route to do so, global capital is particularly vital at this time.
In the imagination of real estate developers (private and public), capital inflow translates into greenfield developments, sprawling out of existing urban centers as well as in the form of utopian visions like smart cities proposed by PM Modi and propagated by the likes of Amitabh Kant. The 100 smart cities mission of the government, being taken up by the Ministry of Urban Development, proposes the retrofitting of existing cities (satellite towns and mid-sized cities). Clearly, developers and politicians have their sights not just on bringing rural land into the fold of urban, but also are looking at redevelopment of inner city land to fit the new idea of the ‘world-class’, networked, efficient and competitive city. In other words, a smart city, that will be attract global capital and be built by it as well.
This same ideal of the smart city also hopes to achieve better standards of living for its citizens. Better informed and networked citizens are envisaged to be more skilled and productive, more robust infrastructure is expected to deliver services and amenities “comparable with any developed European city” (as quoted in the concept note on smart cities on the MoUD’s website).
This is the vision. In reality and on the ground, how will global capital transform our cities? As an urban planner with a specific interest in housing issues, I think this is a critical question.
The experience of cities like London, which faces a debilitating housing crisis, is telling. Aditya Chakrabortty’s piece in the Guardian eloquently describes the bizarreness of the London situation: Here is a city where global investments in real estate have meant that poor and even middle class Londoners cannot buy a home in the city, end up paying substantial rental payouts to absentee landlords who live in Singapore and St. Petersburgh!
In India, both Delhi and Mumbai have historically used slum clearances as a tool for freeing land in the inner city; land that is often used to attract capital, some of it global. With the influx of global capital, one can argue, evictions and mismanaged resettlement schemes will become more common, unless a real effort is made to find a socially sustainable way to accommodate the urban poor in the city. The discussion on ‘right to the city’, while trendy among academicians and rights-based activists, has unfortunately found little resonance with private developers nor a buy-in from the State.
Gentrification, that is the ousting of older (and usually poorer) residents of a neighbourhood with newer (and better off) ones, is likely to be the norm in the era of urbanization driven by global capital. As late Scottish geographer Neil Smith, who taught at the University of New York wrote in the Antipode, “the impulse behind gentrification is now generalized; its incidence is global, and it is densely connected into the circuits of global capital and cultural circulation” (Article titled ‘Globalism, New Urbanism: Gentrification as Global Urban Strategy’ Volume 34, Issue 3, July 2002)
The rapid conversion of inner city areas in Indian cities to posher, more expensive real estate is happening right before our eyes. What’s more, relatively new cities like Gurgaon have been planned and built entirely for the educated elite, leaving no planned spaces for the urban poor and indeed, with the rise of global capital, for the middle class. So, similar to London, many of Gurgaon’s middle income families rent from NRIs who live abroad and will continue to do so for a long time. This is because the houses they want to live in that are in the city centre is unaffordable and the housing they can invest in will be inhabitable (in the sense of being linked to functional needs like services, roads, schools, offices and shops) for a long time to come!
As for the poor, housing is only available in the form of rentals in under-serviced areas of the city like urban villages, illegal colonies and slums. The link between poverty and housing is water tight; secure housing is a necessary ingredient in addressing poverty. And if cities (which are oft-quoted as the engines of economic growth) no longer have addressing poverty as one of their prime objectives, what exactly is the purpose of urban development? Making the rich richer, an end in itself….?
It takes no rocket science to figure out that the Indian smart cities in the offing will need to do some smart thinking on the issue of creating housing (and infrastructure) for a wider variety of its inhabitants. The pursuit of global capital would need to be tempered with some even-headed thinking on utilizing this capital for long-term benefits, chief among which must be reducing poverty and improving living conditions for all. There are lessons on land markets, spatial integration and participative planning out there that must be taken into account while planning these smart cities.
Be careful what you advertise #BJP #Haryana #Assemblypolls #land #realestate
Poll season is about the strangest of radio ads. While driving to work this morning, I was surprised to hear a BJP ad for the Haryana Assembly elections that directly addressed the issue of State-sponsored land grab by developers. In the ad, a Haryanvi farmer talks about how the government has used the ruse of wrongly declaring fertile lands to be infertile to hand land over to developers, thus disenfranchising farmers and leaving them out of the development process. Another ad in the same campaign talks about the challenges farmers face to access water for irrigation. Clearly, BJP is aggressively wooing the rural voter in Haryana. Which is all well and good.
What intrigues me is the implication that the BJP, if elected, will NOT develop agricultural land if it is fertile! Is that even possible for a State that seems to have put most of its eggs into the urbanization basket over the past few years? Leveraging its border with Delhi seems to be an important objective for the State from its recent planning documents.
Of course, Haryana has had a Congress government and these policies could, in theory, change if a new government were to come to power. But, as a colleague cynically quipped, if the BJP were to rule then the land taken from the farmer might go to a Reliance instead of DLF, with nothing really changing for the farmer!
We see a general disillusionment with agriculture across India and a decline of the farm sector, but in Haryana, farming is culturally ingrained. Land and farming are a very strong part of the identity of the Haryanvi people. I’m no expert, but perhaps the State has the opportunity to re-focus on the agri sector, for which it needs to think about compact, transit-oriented, well-planned cities instead of the sprawling, poorly conceived urban stretches we see when we drive around the State.
The emotional nature of property: In a south Delhi colony- Oct 10, 2012
Just like I believe Sridevi looked far better without the nose job, I think life is more enjoyable when it is a bit imperfect. For all us city dwellers who juggle several priorities and commitments, organising our life down to the last quarter hour is the basic tool we use to pull it all together.
But every now and then, we mess up. This morning, I got dropped off at Maharani Bagh at 11am for a noon appointment only to be informed that the person I was supposed to meet isn’t around and wouldn’t turn up early either. Of course, I felt stupid. Here I was, in a posh south Delhi colony, car-less, clueless and with one hour to kill. When in doubt, I usually walk. So I stride off down the road in the direction of what I hoped would be the main road and a market.
The peace and quiet of south Delhi’s residential colonies never fails to surprise me. This part of the city comprises large single family homes and despite many of them being converted to apartments, it still has a very quaint old world feel to it. Many homes were built in exposed brickwork, while others looked like Spanish haciendas reinterpreted. This is a rich part of town and like elsewhere in south Delhi, I saw several plots being torn down and reconstructed. Old single family homes turning into swank looking apartments, all replete with wood finished deck-like finishing in gates and balconies, and a lot of glass.
My walk turned out to be about fifteen minutes long and my destination was Cafe Coffee Day in the New Friends Colony community centre market. My solo coffee caper turned entertaining when a dapper set of people sat near me. What started like a congenial family meet soon turned into a sugar coated but ugly spat over (what else) property.
The middle aged uncle berated his nephew who was apparently in charge of the the construction of apartments on family property constantly, dressing him down for his rudeness and also accusing him of irregularities like changing specifications, not keeping him informed, delays etc. While all the while punctuating his stream of accusations by saying you are like my son. He even called him ‘dear’ and ‘love’ a few times, while the young man seethed and defended! I sat there thinking about the emotional nature of property, about the heartbreak and turmoil, anger and misunderstanding that went on behind every house that got torn down to make way for a set of apartments.
On the cycle riksha ride back to my appointment, I looked at the homes I passed with fresh eyes indeed!
The brutal reality of Shanghai the film: Disturbing and thought provoking- June 20, 2012
For those who think films are about out and out entertainment, Dibakar Banerjee’s Shanghai was no joyride. The film hits you with its reality and thoroughly subtle characters. No gimmicks here.
It was one line delivered by the poor innocent tempo driver who got caught in the political mess and was ruthlessly used to murder the unwanted activist, that got my attention. He said “Jeena haraam ho Gaya hai par marne se bhi to dar lagta hai”. Telling the political side of India’s journey of ruthless real estate development, Shanghai highlights the ultimate tragedy of democratic development. Millions in our nation feel this way about their lives, as they continue to see the fruits of development being reaped by a few while their lands are snatched, livelihoods lost, rights taken away and self esteem eroded till they are forced to lead an existence without meaning, devoid of self respect and filled with a constant, irrational fear.
Last year’s backlash against corruption led by Team Anna showed us that this frustration is very real for the middle classes as well. Neither the poor, whose existence is severely compromised in these sort of ruthless power games, nor the middle classes, have any recourse and feel sandwiched between corrupt politicians and bureaucrats on one side and on the other, the daily struggle of their lives. We all live from day to day, hoping against hope that transformation will come. Some of us join hands with the system, others convince themselves to take an apolitical, neutral stand but when we reel under the impacts of poor governance and sheer callousness from those in power, it’s hard to not be angry. The anger simmers and we watch helplessly as our society disintegrates; rising crime and self-centredness become expressions of this frustration we all feel.
The film captures all this beautifully. It helps you see the story behind the headlines, the news of RTI activists killed and collectors mown into. It makes me deeply sad. This beautiful rich land of ours literally being raped in the name of development. As a planner I know there are better ways to do this. That inclusive and sustainable development is possible. But for that, the government and all those in power including developers will have to blunt the razor of greed and sit across the negotiating table with the community to find win win solutions for everyone. Utopian? Perhaps, but let us at least try!