This morning's papers tell me that the residents of Chandigarh are willing to `shell out as much as Rs 1 crore (twice the actual cost) to own a two-bedroom flat.' And this is a state government-run development ( Chandigarh Housing Board). So while it might be a competent build, it might not have the bells and whistles private developers throw in.
This is not to say the residents of Chandigarh cannot afford Rs 1 crore ($210,000) apartments, particularly for a Housing Board construction. Sure they can. A realtor taking me around in a distant north Mumbai suburb last weekend told to forget thinking about buying a good place if I had less than 1 Cee R in my pocket. What he meant is Rs 1 crore . The realtors/brokers say `Cee R', because they think its respectful in case you don't belong to this exclusive club. Thankfully, the family was looking for a place to rent and not to buy.
The latest Economist has an interesting survey called Bricks & Slaughter, arguing that while property is widely seen as a safe asset, it might be the most dangerous of them all. Try telling that to the folks in Chandigarh. The Economist piece also talks about (alongside advertisements for gleaming new condos in Singapore where you can work, play, live and grow and luxury villas in Gurgaon, near Delhi, where `Fine living rarely gets any finer') the famous Burj Khalifa, the 388 metre structure in Dubai. Many flats inside lie empty, as do houses in many parts of the world from the United States to Spain.
Say It With Pride
All of which might seem like alien nations to us in India. Chests brim with pride when it comes to property prices. It's an achievement for which you've worked hard by spotting at the right time and place. The realtor told me that there was more supply coming up in this distant north Mumbai suburb. "So ?" I asked. "So prices will always be stable or they will keep rising," he told me with the eternal confidence I have come to expect from this breed.
At one level there is nothing exclusive about a club whose tentacles have now spread to the farthest corners of the country. I do wonder, often, why so few people consider rising asset prices a problem. Actually, even inflation is barely a problem - it's a sign of growth which we crave for. Then I wonder if we really have the brainpower to fix the problem of asset prices. And then I wonder again whether the brainpower that there is keeps it that way, by managing and benefiting from such supply-demand imbalances. Hint: one very enterprising young man from this world was thrown into jail recently.
Oil prices are rising. I asked in an earlier post whether we were ready for a situation when oil would hit $200 a barrel as has been widely predicted. Well, the answer is evidently no. But at least we think about it. When it comes to rising property prices, we've stopped thinking. Welcome to the 1 Cee R Club. Too bad if you don't belong.