The inevitable slow down of real estate in Indian cities. Here is a thought!
A large part of India still lives and functions out of rural areas. Urban space's percentage in terms of total land use in India is very small. Though we have not yet seen a major boost to urban basic infrastructure like water, roads, sanitation and medical facilities, real estate developers have been hammering away their piling equipment on the soil of large Indian cities day in and out. Yes, there have been momentary slowdowns but then, there have been immense growth in prices and demand soon thereafter. A large part of this demand for residential real estate comes from rural - urban migration. People from rural India migrate to the metros and large cities equipped with money or job offer letters and start new lives. They need homes. Another thing that these folks bring along is the lust for urban action. And they are willing to pay a big premium to live it up in style and make their urban dream of years come true, whatever the cost.
However, as India grows steadily, we reckon that a lot of this growth is going to happen in the rural areas. Agriculture and its allied industries will get a huge policy, economic and technology boost to continue to be able to feed the growing population and save some for a rainy day as well. As growth in the rural areas touches double digits, rural - urban migration will slow down and ultimately come down to a negligible level. Costs will drive corporate offices, distribution and trading hubs deeper and deeper inland, leaving only critical functions and services to be conducted out of metro cities. As lesser people move to the large Indian cities, demand for housing will reduce, resulting in a slowdown of real estate in the Indian metros.
We concluded that the slowdown in Indian real estate is inevitable. It may take a decade or two to start showing but infinite expansion of the metros will certainly stop. Prices across whole cities will then start self correcting, hit by a lack of demand. But that will be a good sign, truly. Ask the small town dude working on the desk beside you and he still carries a piece of home in his heart. He came away as his hometown had no infrastructure, no opportunities for personal and lifestyle growth. Deep down inside, there are so many of them who can go back to their roots at the drop of a hat if they can make half as much money as they are making in the metros, living miserable, unhappy lives!
Bring on the growth. Let us shed the myopia of crazy, unsupported construction in the Indian cities. We need the other three quarters of this country, to stay where they are and reap the benefits of holistic growth! That is what will make India a great nation. Not some growth index that lives off the fact that, today, you pay fifteen grand a night for a serviced apartment in a metro like Mumbai!
About the author
Rahul Mishra is a real estate professional who started his life as a salesman, selling homes in the city of Kolkata since 2001. He worked pan India in real estate organisations like MMG Realty, Bengal Shrachi, The Phoenix Mills and The Space Group before helping co found Pillars with a single objective - To make real estate easy!Connect with Rahul Mishra on Linkedin.
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