The
Common Man in the Real Estate Market.
(Disclaimer: I have no especial knowledge
of economics, finance or on any of the subjects I talk below except for what I picked
up from reading in the popular media- so the sources for this post are all out
there in the public domain- in newspapers, magazines and television.)
Suppose you want to buy a piece of
land to call your own, to build your dream house where you can retire to in
your old age (the dream of every working man and woman), what do you do to make
it a reality? As a first step you go out with the so-called real estate brokers
(which group includes pretty much everyone else except you nowadays) and you
pick them up in your vehicle when they say, where they say and you grin and
laugh at their inappropriate jokes and accompany them as they take you all over
the city into places you never knew existed, while they keep eating masala
dosas and drinking umpteen cups of tea in your name (this is for your work,
isnt it?) and finally they deign to show you worthless pieces of property at
humongous rates which you just cannot afford on your salary unless you are
prepared to mortgage your unborn children and their unborn children too in the
bargain. And every time you pass the bank where you took the home loan you are
reminded of the evergreen classic movie “do bigha zameen” where the serf/farmer
is tied to the hoe and pulls it himself instead of the draft bullocks- a burden
which finally lays him under six feet of ground.
Seems an impossible situation
right? You are given a choice of selling your soul to buy a house or going
through the rest of your life dependent on the whims and fancies of your house
owner. If the said house owner is barely tolerable – which means he doesn’t resort
to midnight knocking at your doors to check if the noise he heard from your
house was you drilling a new nail in his walls then you can count yourself very
lucky. On the other hand there are other kinds of picky house owners who will
give you every kind of exam (including a rectal exam if you let them) or sniff
at your breath to test if you eat non-vegetarian (eggs and meat) food even if
you swear on your favorite dead saint that you eat only dead plants and grasses
like they do, if you ever go to them to ask to rent their house before maliciously
declaring that they have now decided to let it out to only a certain specified
caste or community and you sadly don’t belong to their choice of preferred denomination.
And then there are those ultra-conservative
landlords who swear that those who roam around in the nights are anti-social elements
even if they are honest rent paying tenants and hence strictly lock their gates
at eight in the night (an hour after sun down) to prevent the crime rates from
rising. Not to mention ecologically-minded landlords who decide to act with a
social conscience and conserve water by making sure that all the groundwater
stays in the ground where it belongs and consequently their tenants don’t waste
the two buckets or so water they are supplied through the taps every day at
midnight. I could share more and more stories of such crazy, avaricious landlords
but the point is made I guess, so I will move on with the rest of the post.
which is about how every tenant, the “everyman” people talk about wants and
yearns and dreams of the day he will be the sole owner of a piece of land to
claim as his own where no else can come in and order him to behave himself,
rent paid on time or not. I am sure you can understand the desperation of the
hordes of people out there who are searching for such a piece of their own to
own.
But if by accident you happen to
switch on the television, especially the financial channels where men wearing
suits and ties talk in big, big words about the economy, foreign exchange and
stuff like that which goes way over your head, so what do you hear day in and day
out from these self same knowledgeable economic experts and financial pundits? You
hear them keep advising you that you are about to be cheated in the real estate
market that is if you are stupid enough buy any land or an apartment, that the
real estate market is going through an artificial bubble and once the housing
bubble burst prices will drop down to the pavements- so dont buy land but go
and put your money on stock markets - buy stocks like Enron, Satyam etc. their
only financial advice seem to be to repeat the same two phrases “financial markets
and stock markets”. If you believe them the only way to real wealth is through
paper money where you are handed a piece of paper which says you own such and
such a piece of company but where in reality unlike the directors and other
owners of the company who drive around in luxury cars and dine in fancy
restaurants all you get is a letter to attend a stockholders meeting where you hear
the bad news that the depression is killing that sector of the economy so their
annual dividends is once again in the red.
Well, if you are fool enough to
listen to such experts and postpone your decision to buy that apartment then
you are merely wasting time, for the situation does not change even when the
economy tanks or a recession comes on us from America or even when the promised
real estate bubble turns out to be just a stock market bubble and the stocks of
much vaunted “rising sector” companies like Satyam which were heavily
recommended by the same economic gurus were the ones which pop like soap
bubbles. More than a working knowledge of economics what we need is commonsense
in such conditions. We need to remember that land supply is limited and hence
land is a valuable commodity. That’s why the real estate market is soaring even
during recession times. But it brings us back to our original question, when
there is a large gap between the average income and average cost of land what
can we do to change this situation?
Well you can take the conventional
route and apply for a mortgage at the bank and hock your wife and children to pay
the EMI every month and barely make the two ends meet for the rest of the
month. But our wise bankers and economists and financial gurus will make sure
that you the common man cannot take this easy way out to divert your money from
its great role in saving the national economy and financial markets. They will
get the RBI governor to increase the lending rates which means your local
banker hands rubbing gleefully will increase your monthly EMI payment rates thereby
making sure that you have two choices – either sell your mother-in-law if you
find a buyer for her or just abandon your plan to buy a home.
You can’t beat the system ever for
our bankers are clever enough to even punish the wise guys who seek to sell
some ancestral property left them by an ancient forefather to foreclose their
loan- for the bank will penalize you with heavy penalties for early closure of
the loan- the only instance in the world where you get punished for paying back
the money you borrowed. And as an alternative the banks will provide with easy
loans to play the stock market and inject money into the financial system. For what
they hate is real wealth- wealth which does not come from the stock markets. And
to facilitate this- all rules, all laws and everything which the entire
political and financial system of our great country India does is to force you
into putting all your money into stocks, bonds and mutual funds- at your own
risk of course.
And yet if you look around you can
find a busy property market where even second hand apartments are going for
crores of rupees and lands are changing hands every day. How do they do it?
Simple. They have the help of those great benevolent gods of our times – our politicians.
If a politician decides so, he can help you buy your favored piece of land with
no hassles. He flicks a finger at his favorite bureaucrat who issues a
government notification declaring the land as “needed for essential government purpose”
and forcibly acquires it in the name of the government. The landlord is paid a
pittance as compensation and chased off his property. Then the land is declared
surplus to needs and is thrown off into the auction pool where it is finally divided
between the politician, the bureaucrat and you – if you are lucky enough to
know one of the two and are prepared to pay them what they demand for it. That
is the easiest way land changes in urban centers in India.
Go look at any of the large IT
parks where software companies have raised multistoried buildings and parks and
food courts in acres and acres of land. Ask their owners how they were bought
or acquired and you will find this tale behind every one of those land-allotments.
Multinational companies and IT/ITES companies whose incomes from foreign
remittances range in the billions of dollars- all of them get their land for free
from the government as part of software parks and industrial corridors. No one
pays a single paisa to the original owners except as bribes to the politicians and
bureaucrats who sanction these land allotments under their discretionary quotas.
This is a universal truth known to everyone but we keep our eyes closed to it willfully.
Every single company which prides itself
on its clean corporate governance and is held up as an ideal for its probity and
whose CEO’s and CFO’s are feted by our media is part of this fraud on the ordinary
landowner and common man- the aam admi- you and me. There has never in the
history of Indian IT industry or manufacturing history been a company which refused
land from the government but bought it straight from its real owners. Why
should they when they have the might of the law to do their dirty work? And that’s
why everywhere you go around the cities and their suburbs you find large
software parks and multinational factories- there is no greenery, no wetlands,
no water bodies nothing but the concrete dust of large construction works. Amidst
all these riches of land is the irony of the common man searching for a small
plot of land to call his own. Of such contradictions is our great country India
made. Will it ever change? What do you think? Will the common mans dream to own land remain forever a dream? Tell me your thoughts.
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