Real estate prices touch sky, not a bubble -research

http://businesstoday.intoday.in/story/real-estate-property-prices-rising-interest-rate-home-loan/1/24244.html

Realty Check

Real estate prices touch sky, experts rule out price bubble
Buyers jostle by each other, trying the

canadian viagra

ir best to get the attention of sellers. Sellers have no time to breathe and can barely entertain the buyers. The scene could be from a bustling local market. But here sellers are smartly-dressed people beaming with confidence. It is a 'property fair' where developers and brokers are hardselling their properties and prospective buyers are eager listeners.

The Economic Survey 2011-12, struck a note different from the frenzy at the fair.
"Greater attention needs to be given to asset price bubbles in real estate and stock markets and their implications for the economy and the strength of the financial system," it said.

Are property prices higher than what fundamentals justify? Should the Economic Survey remark be taken as a cue to a price decline?

BEYOND BASICS

If you look at the real estate market on prices alone, it seems the demand is growing. But on the ground, the demand in six major real estate markets - Delhi, Mumbai, Kolkata, Chennai, Pune and Bangalore - has fallen significantly.

"The demand for residential property is subdued in most cities. This is primarily due to the 'wait-and-watch' policy adopted by end-users anticipating a fall in prices and interest rates on home loans in the near future," says Anshul Jain, chief executive officer at property consultancy DTZ India.
40 per cent is the decline in demand for new residential properties over the past one year.
"On an aggregate, the demand in India's six main markets has declined around 40 per cent in the past one year. New project launches have seen a drop of nearly 50 per cent," says Amit Goenka, national director, capital transactions, Knight Frank India, a property consultancy.

Basic economics says a product's price falls as demand declines. However, developers have been able to resist price cuts despite slowing sales, leveraged balance sheets and high interest rates.
"The real estate market has defied fundamentals in the recent past," says Shveta Jain, director (residential services) with real estate consultancy Cushman & Wakefield (C&W) India.

THE NOW-OR-NEVER PITCH

In the last few years, property prices have risen mainly due to speculators. For instance, they are buying as many as 80-90 per cent flats in under-construction properties in upcoming locations in the National Capital Region. After this, developers raise prices to help these early investors register notional gains.

Developers also launch projects at prices higher than that in the locality. "Like in any other business, builders have to keep up the enthusiasm. It is a strategy to generate demand," says Goenka.
Developers often put a 'sold-out' board within a few weeks of the project's launch while their brokers actively "resell" the same properties. "If all units are sold overnight, it is a clear indicator that an artificial scarcity is being created. This can be found in the National Capital Region," says C&W's Jain.

The current absorption rate for new projects is 10 per cent per quarter, which means it takes around three years for a project to be sold out.

COST FACTOR

Hyped sentiment is not the only culprit. "High prices can also be attributed to the rising cost of construction and funds," says DTZ's Jain.

30 per cent is the increase in input costs for realty projects, partly due to inflation.
Land prices have also been steadily rising. "Input costs, including construction materials and labour have risen by 30 per cent. Excise and service tax rates have also increased," says Goenka.
Some analysts blame shortage of affordable and mid-range residential properties. "While the worst shortfall is in affordable housing, a large number of developers have most exposure to mid-range and luxury housing. This is increasing the gap between supply and demand," says DTZ's Jain.

BUBBLE? NOT YET!

Future locations do seem overpriced, but analysts rule out a price bubble. "Some builders have been over-ambitious in pricing new projects, but I don't think there is any price bubble in the real estate market," says C&W's Jain.

Heavy speculation remains a concern as it means that valuations, especially in upcoming locations, are not backed by real demand. "Speculators can remain invested only for a specific period. They have to eventually sell to end-users. If demand from those who will occupy the properties is not high, there will be excess supply and prices will fall," says C&W's Jain.

MUST READ: Tips to buy property outside India
Though some developers have a lock-in period to end flipping, most do not mind bulk purchases as this generates cash. Is there a need to check speculation? Market analysts have different opinions.
Knight Frank's Goenka says if speculators invest, the market eventually discovers the right price. "As it is a free market, nobody should be stopped from buying," he adds.
In contrast, C&W's Jain favours regulation to check speculation. She says developers should screen buyers and have a sale lock-in period of two-three years.

Speculators are not expected to be deterred by policies like 1 per cent tax deduction at source announced in this year's Union Budget. "Looking at the returns, investors will continue exposure to real estate and it will be not possible to check such investments through a regulator or policy change," says DTZ's Jain.

SLOW GROWTH
Notwithstanding the hype, the frenzy is expected to settle. Residential property prices in most locations have almost peaked and no price increases are expected in the next 18 months. However, most experts rule out a price correction.

MUST READ: Invest in a house cautiously
"Owing to the increase in the cost of raw materials, the possibility of price correction is fairly remote," says DTZ's Jain.

As several lenders have reduced home loan interest rates in April 2012 even before the Reserve Bank of India slashed its policy rates, property prices may go up. However, prices of new properties in upcoming locations without adequate infrastructure may decline. "Prices in select locations, especially future locations which are witnessing heavy speculative activity, may decline 5-10 per cent in the next six months," says C&W's Jain.

Analysts say it is a good time to buy for end-use and long-term investment. "If your investment horizon is more than three years, it is always a good time to invest in residential properties as markets eventually go up due to their cyclical nature," says C&W's Jain.

MUST READ: How to win a good property deal
If you plan to buy properties in emerging locations, you need to analyse the planned infrastructure and supply-demand forecast for the region. Though premium properties are currently available at large discounts, the fact is that mid-range houses offer better returns than the luxury ones, both in capital appreciation and rental yields.

"If you have the money, split it between established locations with ready infrastructure and habitations and emerging locations," says C&W's Jain.

STOKING PRICES
>> Speculation for making quick gains
>> Rising construction cost
>> High labour charges
>> Hike in excise duty
>> Increase in service tax
>> Rising land prices
Arun Gupta

Real estate boom in suburbs

http://www.telegraphindia.com/1120521/jsp/bihar/story_15510962.jsp#.T7mkrolhic0

Real estate boom in suburbs - Land prices touch sky in Bihta

Selling fertile land may be anathema to farmers, but tillers in Bihta are parting with

cheap viagra online

their plots without much complaint.

The land price in this small town — 40km west of Patna — has skyrocketed in the past few years because of the construction of a number of projects in the area, including Indian Institute of Technology (IIT), National Institute of Technology (NIT), Employees’ State Insurance Corporation (ESIC) Hospital and others.

Sources claimed that in a few years, Bihta would be to Patna what Gurgaon is to New Delhi. At present, a cottah (1,361sqft) of land is priced between Rs 10 and Rs 15 lakh. A few years ago, it was available for only Rs 2-2.5 lakh.

Netaji Subhas Institute of Technology registrar Krishnamurari told The Telegraph: “When our engineering college was set up in 2005, 11 acres of land was purchased for Rs 44 lakh approximately, at the rate of 4.4 lakh an acre. Now, the market rate of the same plot is about Rs 6.5 crore per acre. Biada (Bihar Industrial Area Development Authority) is selling land at Rs 45 lakh per acre.”

The lucrative land price is common knowledge. A tea stall owner at Bihta Bazaar, Saryu Singh, said: “Most of the land near the road (Patna-Ara highway) has been sold or acquired by Biada.”

Asked if farmers willingly sold the fertile plots, Singh said: “Earlier, we had to sell around 1 bigha land (around 20 cottah) to get our daughters married. Now, we can raise the same money by selling only 1 cottah.”

A few years ago, a bigha land was priced at Rs 5-6 lakh. Now, one would have to shell out Rs 10 lakh for 1 cottah; in other words, around Rs 2 crore for a bigha.

Construction work in Bihta has also increased the sale of building material.

Ramveer Singh, a cement stockist in the area, told The Telegraph: “Two years ago, I used to sell around 100-150 cement bags a month. Now I sell more than 2,000 bags of cement every month.”

“Around four years ago, we had to depend on Patna for the consumption our materials,” said Ashok Kumar Singh, a stone and brick supplier. “Now, thanks to the plethora of construction work in Bihta, most of my materials — stone, sand and bricks — are sold locally.”

Many suppliers from Danapur, Maner and Bikram have shifted base to Bihta because of the boom in business.

Singh said: “Bihta is developing as the academic hub of the state.” (See chart)

The flurry in construction has brought along in its wake a slew of developments. Only a few years ago, Bihta residents would have to rush to Patna to get branded clothes or electronics. Now, they can get everything at a stone’s throw away from their home, thanks to the departmental stores that have opened in the area.

Vinay Sao, a grocery shop owner at Bihta Bazaar, said: “New cloth and electronic shops have opened in the area. We can get what we want close to our home.”

Private Equity Likes Real Estate Investing in Pune, India's Other Growth City

http://www.worldpropertychannel.com/asia-pacific-commercial-news/pune-real-estate-investments-real-estate-private-equity-funds-india-real-estate-investors-sameer-gholve-jones-lang-lasalle-india-new-real-estate-projects-in-india-india-property-i

cheapest viagra in uk

nvestors-5638.php

Private Equity Likes Real Estate Investing in Pune, India"s Other Growth City
Sameer Gholve

According to Sameer Gholve, Manager of Capital Markets at Jones Lang LaSalle India, Pune has been favored destination amongst Real Estate PE funds since 2005 - the year FDI opened for real estate.

Most of the funds are based out of Mumbai, which gives Pune obvious preference, as the city"s proximity allows these funds to track and monitor the market - and their investments - easily. Also, Pune is among the most rapidly growing cities in India after Mumbai, NCR and Bangalore.

Pune Construction

The total flow of PE funds into Pune until December 2011 was approximately US$800 million. This consisted of both foreign and domestic monies through around 32 major transactions over the last five years. 2009 saw the lowest flow of private equity funds into the city, though Investors regained confidence in 2010 arrived. The renewed investor confidence resulted in a massive recovery of private equity deal closures in Pune

Woodsville Pune

As expected, most of these funds have been invested in the residential property asset class. In fact, residential real estate has proved to be the most consistent and enduring magnet for private equity funds into Pune"s real estate sector. In comparison, investments into SEZs, industrial parks (STPIT) and mixed-use townships have primarily been seen only before mid-2008. From 2010 onwards, the interest http://www.phpaide.com/?langue=en in these formats as asset classes has been quite meager.
Significantly, 61% of the total private equity investments that have been seen in Pune were done in projects located in East Pune. East Pune has the majority of the city"s IT industry developments such as Magarpatta Cyber City in Hadapsar, EON IT Park in Kharadi, CommerZone in Yerawada,

Weikefield IT Park on Nagar Road, etc. These IT developments have had a major spin-off effect on the profile of these areas. The higher spending power and commensurate aspirations of the people working in these establishments has caused the arrival of massive malls and also generated a huge demand for quality residential projects. These projects are proving to be the major magnets for private equity investments into Pune"s real estate sector.
Arun Gupta

REALTY TRENDS

http://m.economictimes.com/markets/real-estate/realty-trends/young-buyers-investing-in-property-to-save-tax/articleshow/13007445.cms

REALTY TRENDS

After working for four years, Ramkumar Mahadevan, a professional with the financial

mail order viagra in uk

industry invested in a house. He was 26 years old, when he bought his 2BHK in a premium locality at Kharghar. The gap between the salary levels of working professionals in India and the more developed countries has narrowed in recent years resulting in young Indians being able to afford a house very early in their career.

The reducing average age of home-buyers is reflective of growing financial independence of resurgent India. Manoj John,VP - Corporate Planning & Strategy at RNA Corp says, "The income levels of population in the age bracket of 25 to 35 has multiplied five times in the last 10 years, and the relaxation of home loan lending norms by private and state-owned financial institutions has assisted this transition. Real estate is also seen as an attractive investment option due to the steady value appreciation demonstrated in last decade, which when combined with increasing need for housing in nuclear families become a compelling decision."

Endorsing this view, Mahadevan says,"An employee with high paying sectors like IT, Finance, etc. is able to save enough to cover the down payment for a house in four years into their career."
The youth today are more informed and are smart enough to prioritize things in their life. Buying a house requires some sacrifices to be made and a delay can prove to be costly. Many youngsters believe that once settled in a job, the next step should be to invest in a property and splurging on luxuries can follow.

"These days, generally inflation is higher than the rate of interest on fixed deposits. That doesn't make FD a viable investment option and stock markets don't promise assured returns. So, property remains the best bet as you can also save a bit of tax on the interest paid," says 32-year-old Ameya Dalvi, a media professional who has bought a 2BHK at CBD Belapur.

Sharing similar sentiments is 25-year-old Saurabh Dass, an IT professional, currently working in the USA. He has invested in a 2BHK property that is currently under construction in Dombivli. "With the volatility in the current market, real estate is the most lucrative options for investing my savings. The savings accounts in USA provide interest rates of less than 1%, which isn't comparable to the returns on realty in India. For a person like me working in USA and planning to settle in India, this makes sense as the exchange rates are at an all time high," says Dass.

Search for the perfect house that fits all or most requirements takes at least three months and could even take upto two years. The reason, nine out of 10 times, is typically budget constraints as sky is the limit for one's wishes. There is also an emotional factor when buying the first house and it takes time to make the big decision.
Arun Gupta

Pizza, Prada and foreign makaan - Corporate News - livemint.com

http://www.livemint.com/2012/04/26195332/Pizza-Prada-and-foreign-makaa.html

Pizza, Prada and foreign makaan - Corporate News - livemint.com

When buying Indian real estate is complicated enough, foreign real estate must seem posi

viagra pills

tively daunting. But is it really?

Investing in foreign real estate is not a fiendishly complicated task. iStockphoto
The ongoing global economic malaise has created an opportunity for Indians to own prime residential real estate. The domestic populations of countries such as the US and UK are still working off the loans they took during the boom. Anaemic domestic demand has led to declining house prices. As the balance of power has shifted towards buyers, foreigners have exploited this opportunity to own residential real estate at fairly reasonable levels. The scope of the opportunity in some markets can be seen in chart 1 (see below). In most countries, the decline in house prices following the global credit crunch has left them at levels where they were five or more years ago. The exceptions being Canada and Australia, which are yet to see any meaningful decline.

Additionally, the strong recovery in foreign equity markets from their lows in March 2009 is yet to be seen in housing markets. Apart from stagnating or falling prices, the number of transactions has also fallen compared with the pre-credit crunch period. A few courageous buyers have stepped into this fearful market following Warren Buffett’s dictum that the time to be greedy is when others are fearful. However, most of the foreign buyers have been the global ultrarich buying multi-million-dollar properties. But this does not mean that one needs to be a Russian oligarch or a Middle Eastern sheikh to buy a house in London, New York or Valencia for that matter. For example, there are decent London properties available under half-a-million dollars.

The question to be answered is whether it makes sense to invest in real estate abroad. Intuitively, total returns (both capital appreciation and rental yield) from real estate in Western countries are expected to be lower than in India. Chasing the highest return in India has merit but is a blinkered view. From a portfolio perspective, foreign real estate has two advantages: first is of diversification and the second is wealth preservation.

A foreign asset denominated in hard currency in a nation with stable rule of law provides protection against unexpected downside. Russian, Middle-Eastern and European investment in the London property market is mainly to benefit from this characteristic.

Where to start

Investing in foreign real estate is not a fiendishly complicated task. The standard metrics of evaluation are applicable but need slight modifications. What needs to be borne in mind is that unlike financial assets, real estate is a domestic asset with risk and return driven by domestic factors. The first step is to gain knowledge of the domestic economy and demographics. This sounds obvious while making real estate investments in one’s own country. Overseas, however, this is a much greater challenge.

Once the fundamental drivers are analysed, the investor needs to evaluate the legal landscape. This would include whether foreigners are allowed to buy domestic housing and the strength of protection afforded to their property rights. It would also include the degree of regulation and transparency in the housing market. A lot of Western nations would satisfy the criteria of being open, transparent and with regulated jurisdictions. However, for Indians, the US and UK are preferred investment destinations. This is because of language and presence of similar commonlaw legal systems.
Other Commonwealth nations such as Canada and Australia would also be in the list were it not for the fact that their housing markets are yet to deflate. Ireland could be a contender were it not for its poor macroeconomic outlook.

Having decided on a country, the next step is to drill down to the city and area level. Economics and demographics are also important to evaluate the attractiveness of cities. For an example, New York with a resilient finance industry is better than Detroit with a declining car-manufacturing industry. Determination of a specific area requires the services of a local expert. It also involves enormous amounts of due diligence. The final step is to analyse investment economics under the familiar heads of transaction costs, tax treatment, mortgage availability, rental yields and running costs.

Graphic by Naveen Kumar Saini/Mint

Local experts such as estate agents and lawyers are necessary to execute the investment decision. While there are specialized real estate agents and legal firms catering to the international buyer, most of them operate in the multi-million-dollar segment (around Rs. 5 crore and above). Investors with smaller pots may be better off just talking to the agents and lawyers that the locals use.

Let’s use the London market as an example.

London is one of the investment options that Indians should consider. The UK economy, bogged down after the credit crisis, is recovering, albeit slower than the US. London is the main contributor to the UK’s gross domestic product and the main destination for immigrants into the UK, around 250,000 of whom arrived between June 2010 and 2011. Immigration combined with limited land availability and restrictive planning laws keeps the demand for housing up. London prime property is also the object of desire for the rich from Russia, the Middle East and Europe. Their purchases in the sought-after postcodes such as South Kensington, Belgravia and Knightsbridge led to a percolation of demand to other areas of London. This is mainly the reason why the London property market has massively outperformed the broader UK market.

Unfortunately, for rupee-denominated investors, the currency’s recent plunge has made London property 13% more expensive compared with last year. However, waiting for the rupee to appreciate or depreciate should not enter the investment decision since, when you think about it, that is a separate foreign-exchange trade in itself.

Having decided upon London, the next question to answer is where and what type of property to buy. Unless one wishes to compete with the global superrich and pay an enormous premium for a postcode brand, the lesser-known residential areas outside of Zone 1—as the heart of Central London is called—are preferable. They offer potential for capital appreciation and are still reasonably priced in comparison as shown in chart 2 (see above). It compares Wandsworth, a popular residential area for young families, and the Royal Borough of Kensington and Chelsea, a magnet for the global super-rich.

The ideal investment property is one which costs less than £1 million. This has two main advantages; the first obvious one is of a lower stamp duty. Properties between £250,000 and £500,000 pay 3%, and those between £500,000 and £1 million pay 4%, compared with 5% for properties above £1 million and 7% for those above £2 million.

This exemplifies the implicit political advantage of not being classified as a ‘‘rich man’s property”. It is very important in today’s economic environment where Western governments are trying to raise tax revenues. The second advantage in choosing such property is dual demand—from people lower down the property ladder looking to upgrade, and from people above looking to downgrade, such as when children move out and the couple wishes to move into a more manageable property.

London is only one of the options from a plethora available to the smart and affluent Indian investor wishing to add foreign real estate to his portfolio. There are hundreds of more options from chalets in Swiss ski resorts to cut-price Spanish seaside villas. However, due diligence of national and local factors are the key. Those who are short on time can still add foreign real estate to their investment portfolios using real estate investment trusts (REITs). But that is a discussion for another day.

Shashank Khare is a London-based investment professional, learning from the capital markets what they didn’t teach him at IIM Ahmedabad.
Respond to this column at indulge@livemint.com
Arun Gupta

REALTY TRENDS

http://m.economictimes.com/markets/real-estate/realty-trends/rbi-rate-cut-a-boon-for-affordable-housing-investors/articleshow/12747704.cms

 REALTY TRENDS

The recent move by the Reserve Bank of India (RBI) in its annual Credit Policy has given some hope for investors in the affordable housing segment. This is being seen as a positive development for the overall property market. While investors remain cautious and wait for banks to announce the lowering of interest rates, realtors are optimistic of the scenario, however, hoping that inflation remains under check.

"While the rate cut of 50 basis points is definitely a ray of hope, it does not dispel the shadows nearly as much as may be initially supposed. It should be borne in mind that the Reserve Bank of India (RBI) has hiked interest rates 13 times between March 2010 and October 2011," says Om Ahuja, CEO - Residential Services, Jones Lang LaSalle India.

"While this is understandable , given the ongoing concerns over inflation and liquidity in the market, the spate of rate hikes has created a compounded problem for the residential real estate sector. The series of hikes in the past have also affected the price that builders put on their properties, since their own costs of borrowing have increased. It is unlikely that property prices will come down because of this rate cut. In fact, it is very likely that there will be an upward bias on property rates because of the anticipated improvement in sentiments of buyers who have so far been sitting on the fence, waiting for some signals of relief," adds Ahuja.

Shrinivas Rao, CEO, Vestian Global Workplace Solutions says the reduction in repo rate will boost economic growth and improve business sentiments which in turn will strengthen buying activity. However, the impact will vary across sectors depending on implementation of the cut by leading banks.

"Leading lenders are likely to cut interest rates on deposits and loans. Home loans are likely to turn cheaper. For instance, a 25 basis point cut could lower home loan EMIs by Rs 16 per Rs 1 lakh. A cut in the repo rate will also reduce the interest on commercial loans which in turn will favour developers to avail cheaper loans, thereby providing traction to real estate activity. Cheaper loan rates are expected to attract more end-users, impacting the residential sales positively," he says.

With banks offering loans at cheaper rates, developers are likely to prefer the bank loans as against private equity funds. However, an increase in market demand in the short term will drive capital values, thereby benefitting retail investors, adds Rao

According to Ganesh Vasudevan, Vice President and Business Head, IndiaProperty, the cut of 50 basis points by the RBI is a move that will have a positive effect on the real estate segment.

Land is netas’ currency of power

http://www.asianage.com/mumbai/land-netas-currency-power-445

Land is netas’ currency of power

The Asian Age explores the political-builder-mafia nexus to grab prime plots at throwaway prices

Last week, a report by global real estate firm Knight Frank LLP put Mumbai at the head of a list of most expensive cities in the world for locals. The firm estimated that the price of a luxury home in Mumbai is about 308 times the annual income of an average Indian. The average Indian, or Mumbaikar, of course, has little chance or hope of ever possessing a home in the city in his or her lifetime. That privilege is reserved for the rich and powerful.

But who are these people who not only use this privilege, but also drive up the prices for the rest of the commoners? They are the known faces, our own leaders, who with the help of developers, gangsters, police, and of course, the bureaucrats, work unscrupulously to grab whatever prime land they can at whatever little price they can.

If the leaked report of the Comptroller and Auditor General of India is to be believed, it is frequently a privilege usurped. A number of prominent ministers from the state have appropriated large tracts of land to themselves by using their discretionary powers to sell or lease out the land at a fraction of the official value to trusts they control. This official value itself would be well below the actual market rate.

THE POLITICAL CONNECTION

As recently stated by Union agricultural minister and NCP president Shard Pawar, the state wants to help trusts working for various charitable purpose, by providing land at subsidised rates, but this policy of the government is what has been taken advantage of.

Take the example of the state government allotting the Lavasa Corporation Limited a massive plot of land for development of Hill City near Pune that has opened a new chapter in state largesse. Even as the court of law dwells on the legality of the concept altogether, the names that are allegedly associated with the project smacks of blatant misuse of politicians’ power.

Meanwhile, even as the dust settles in the Lavasa and Adarsh society scam — another case of land grab, the revelations made by CAG’s report resound like a bombshell. The leaked report names many bigwigs in the state cabinet of ministers and shows how the public “trust” was flouted in the name of charity. Public works minister Chhagan Bhujbal, for instance, has been named in the report as his trust Mumbai Education Trust (MET) got a plot at Govardhan Taluka in Nasik admeasuring 50,000 sqm on occupancy right basis at an occupancy price of `7.53 lakh. This allocation was in addition to an earlier adjourning plot to MET admeasuring 41,300 sqm in 2003, the occupancy charge for which was `1.55 lakh. The report says that the entire 91,300 sqm plot was initially reserved for mining activity by the PWD. Interestingly, the MET had requested for the entire plot in 2003, but while it got one plot in 2003, the other was made available to it during Mr Bhujbal’s tenure as PWD minister. The CAG observes that as per the ready reckoner of 2008, the market value of the land was `9.39 crore and the allotment to the allottee, NCP MP Sameer Bhujbal, who is the minister’s nephew and a trustee at MET, was an apparent “conflict of interest”.

Former CM and Union Minister Vilasrao Deshmukh, whose name has already figured in the Adarsh scam and the Whistling Woods case, has also been named for allotting a plot in Borivali worth `30.37 crore to Manjra Education Trust for `6.56 crore. However, no dental college, as was initially proclaimed was ever developed on the land, but in absence of the clause in the agreement to return the plot, it continues to be held by the trust.

A long list of other ministers figure in the list. The story is the same in every case: land given by politician to his own trust at a throwaway rate (see box).

The list ends with the highest and mightiest. President Pratibha Patil has allegedly taken over 81,563 sqm of defence land in Pune for a retirement home. The Rashtrapati Bhavan spokesperson Archana Datta said the land would revert to defence use after the president’s lifetime and hence, there was no question of transfer of ownership.

THE NEXUS

But, it’s not only the netas named in the current CAG report who have a finger in the real estate pie. The involvement of politically powerful people, who have access to the public property, also has a set precedent.

Take for instance, Raj Thackeray, whose name appeared in a controversial land deal as Shiv Sena opposed the sale of Kohinoor mill land. Raj Thackeray, however, bid and won the prime mill land on July 21, 2005. To recap, he and Unmesh Joshi, son of Shiv Sena leader Manohar Joshi purchased a five acre plot of land, Kohinoor Mill No 3, located across the road from the Shiv Sena party headquarters Sena Bhavan for `421 crore, but the source of this money is a secret well-kept.

Real estates is simply too lucrative a business in Mumbai. South Mumbai had always been the costliest as places like Cuffe Parade, Napean Sea Road, Walkeshwar figure in some of the most expensive deals forged.

THE MAFIA’s ROLE

However, Mumbai markets are always booming, with old chawls, mill lands and slums giving ways to high-rises, malls and plush hotels. Not surprisingly, areas such as the Bandra-Kurla Complex are now giving stiff competition to Cuffe Parade for the “numero uno” spot on the list of costliest lands in Asia. But the prices have not gone up overnight.

The process has been long and continuous and there can always be some level of politicians’ involvement expected, which holds the key to allotments. There are umpteen examples of politician-builder nexus, but there are other players in the game as well — as limited as their role may be. These are the gangsters, the mobs that the builders use to either grab someone’s land via encroachment or forceful possession; for clearing slums; to guard their own properties, etc. By extension, the moment gangsters get involved, there is little scope that the police remains far behind in these activities. However, when they are not in cahoots, a conflict can ensue between the police and the underworld.

No matter what the picture or who the players, it is evident that the sheer volume of money that trickles in the business of real estate is what keeps the politicians and builders in a warm embrace as they exercise the policy of “I scratch your back, you scratch mine.” Arun Gupta