Been caught up in too many things of late. Some interesting, some painful.
Have been looking around Bangalore for buying a property for my sister and the rates are so irrational, it doesn’t make any sense. Catch this for instance. About 12km from the Ring road properties are selling for Rs.1200/sq.ft. But, if you go another 3-4km further farm land is available at a rate of Rs.35-50Lakhs per acre (That is about Rs.100/Sq.ft).
So, obviously land supply isn’t the issue. It is an artificially created scarcity. A disincentive for large landholding politicians for creating new state-of-art roads/highways. If you can reach 25Km from Bangalore (in any direction) in about 20-30Minutes, which is the norm in most countries, then the property prices can crash!!!
Just go to This Google Map
What strikes you here is the blue populated portion of the city, which covers just beyond the ring road, is where the maximum population stays. Beyond this, which is about 12-15km from the city, there is lots and lots of empty land. This bears out when you travel away from the city. After about 15km from the city, leave the main road and travel inside one of the side roads, you’ll see large stretches of unused (even unfarmed) land. Go about 15km from Jayanagar, JP nagar, Indiranagar, RT Nagar, Malleshwaram, Koramangala or any popular part of town, and go in to the narrower roads, you’ll start seeing acres of empty land.
You can even buy these lands (only if you are an agriculturist, and can trust the land documents). The rates are as I said in the range of Rs.100/sq.ft
Now, what stops people from buying these??
1. Lack of Roads is primary reason. No one wants to spend hours traveling to their work place.
2. Lack of clear, legal title verification mechanism. Too complex to verify 45 years of land ownership records
3. Lack of Legal status, as only converted/approved layout land can be bought by majority of middle class.
4. Government doesn’t approve conversions and layouts easily as it is huge source of money for officials and politicians.
I believe that the future belongs away from Bangalore. If I can buy 1acre of land 25km from Bangalore for 40Lakh rupees, then there is no reason why prices should be Rs.5000/sq.ft in just 8km from city center. As roads improve, people will travel further without much thought. The suburban sprawl of US will become a reality in India.