India Land of Contradiction: Implications to the Property Market

I write this week from India, having spent time in Mumbai.

In India contradictions survive side by side as if it were normal to do so.
Everything is just blended here. So much commotion and so many cars jostling for every inch of space on the streets. Here you have the most holy men in the world and the most corrupt living side by side coexisting in the same space.

These contradictions also extend themselves to the property market. In Mumbai, you have the most expensive property in the world, namely Mukesh Ambani new home costing £500m and only a stone through away from it Asia biggest slum Daravi in Central Mumbai, made famous in the recent hit Slum Dog Millionaire and a subsequent BBC documentary.

On one end of the scale, we have the Ambanis monstrous tower costing $1bn, which is currently under construction.
It consists of accommodation for 600 staff. It is the equivalent of a 60 storey building it house, 3 helipads, 6 parking floors to park the 168 imported cars, a gym floor, an entertainment floor and a few guest floors. Ambani’s new private heaven will occupy more than 48,000 square feet of the prime most land in one of the most expensive cities on the planet.

As per 2001 census, 54.1% of the city’s population lives in Dharavi  Asia’s biggest slum.
Mumbai has now spilled over to its neighbouring areas, giving rise to a hand-full of suburban domains.

It is actually very derogate to call this a slum. It actually is the heart of Mumbai. People live seemingly happily and actually thrive. The slum spreads laterally. This is the issue.
This takes up much valuable land. Instead, the plan is to do away with this thriving and productive community and to lock them up in tower blocks. This will then destroy the fabric of the all-important Indian family network, which is one of the most fundamental reasons why Indians not only survives, but also thrive happily.

In exchange for rehousing eligible households in 300 square-foot flats and providing some requisite infrastructure, amenities and commercial space, developers win the right to build developments on the rest of the land for sale on the open market.

The plan has been widely marketed as a win-win solution: a model of slum redevelopment through public-private part nership to be exported around the world.

The project is ridiculously lucrative. Once a no-man’s-land on a peripheral marsh, 590acre Dharavi has found itself in the center of globalizing Mumbai, surrounded by three major railway stations, a bus station and the two major east-west link roads. Most importantly, the Bandra-Kurla Complex, Mumbai’s new financial hub, flanks it where land values rival those of Manhattan and Tokyo.

It continues to be the entry point for many of Mumbai’s migrants and has been home to many families for generations. It has provided affordable shelter, economic opportunities and social mobility for countless people.

Dharvi has attracted support from the most surprising places. The Prince, who visited Dharavi in 2003, cited it as a model for environmentally and socially sustainable settlement because of the way it was organised around people’s needs. He was struck by what he described as the “underlying intuitive grammar of design” that, he said, was “totally absent from the faceless slabs that are still being built around the world to `warehouse’ the poor”.

The economic statistics of the settlement are astounding. They recycle 95% of Mumbai’s waste, there is no such thing as junk here, and everything is recycled and reused.
One million people are reported to call Dharavi home, but for many, it is also their place of business.

Other products manufactured in Dharavi’s cottage industries include soap and leather. One leather worker was so successful that he exported 25,000 belts to WalMart in the United States; he has since moved up and out of Dharavi. The annu al economic output in Dharavi is estimated at $1 billion.

I was amazed to see the levels property prices had reached within this city. The prices in Central Mumbai surpass the expensive price in areas of London.

The difference is India , has one of the strongest growth rates in the world and the property market in Mumbai will be a ridding on this wave. I can see most NRIs being priced out of this market in years to come.

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This article is an extract written by one of my mentors Suresh Vagjiani, MD of Sow & Reap

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