There is no doubt the Indian real estate market is highly overvalued and that there is an impending disaster round the corner. Investors and speculators beware!
Let us accept that this sharp increase in real estate prices throughout India, is not because of increased demand which many analysts, whose livelihood depends on real estate, want us to believe. Speculation is a major driving force. But there is more in it than that meets the eye. Cartelization is another major contributing factor. Big builder have formed cartels in many cities and artificially jacked up the price. The third contributing factor is hoarding. Some unscrupulous businesssmen have cornered strategically located prime properties. Such properties are typically located close to IT parks, SEZs, railway stations and airports.
All of those show that we Indians have not changed during last 15 years of liberalization. I thought after 15 years speculation, cartelization and hoarding had become things of past and that MRTP has lost relevance in today's new, liberalized India. I also thought that the average Indian business man had changed his manipulative business partices after being exposed to the global economy for a fairly long period.
I was so wrong!
Today's property speculators should be dealt with as firmly as we used to deal with food hoarders of 60's and 70's. India is an highly overpopulated country. Land should be treated as a limited natural resource and should be protected and regulated like food grains, water, radio frequency, minerals etc.
The government should wake up and take some action. It is common knowledge that all the political parties are making quick money out of this artificial boom. That is nothing new in India and let us not get too moralistic about that. But the same politicians should realize that they have to survive politically too. Real estate prices, if left unregulated, may soon turn into an election issue.
