Monday, August 27, 2007

Building a house in India: A paradigm shift

All the members of the G-gang used to laugh at Prasad when he used to come up with this statement Shucks man! I should have been born a few years earlier. I would have been a millionaire. But then, over a period of time, we could realize what he said was just true. The IT (Information Technology) scenario around the time of 1998 was one of the best periods for a budding engineer to blossom. People made money like never before, investing in the stock market and reaping the benefits to the last pie. It was the time when the common man turned into a big man.

Let us forget the IT boom and the resulting doom. Let us go back to the early nineties, no, the late nineties. Everyone knew that if you could come to the US for a couple of years, it was well within your reach to build a palatial home in Malleswaram, Bangalore. Make it three years, and you could enhance your home with the best of furnishing. There was a huge difference in the economy of the two countries - USA and India. The dollar rate was at an all time high. The multiplication factor never fell below fifty. People who went to the US had built an aura around themselves. This was actually the time our economy was on the threshold of big time boom. The number of people traveling abroad was beginning to rise, and the purchasing power parity of the public was on the verge of taking off to new heights. People were gradually looking forward to disposing off their old scooters and bullets, rather their old Maruti 800s and taking the plunge with the good cars from the Japanese and Korean markets. The market had opened up to everybody. The consumer was satisfied and the seller had the opportunity to sell a variety of things. This phase of development is crucial to India's development in the early part of the new millennium. This was the time when the market in India was opening up and people who were reaping the benefits had all the advantages to settle down perfectly in India.

This phase, I would call as the important phase of economic boom. This was the period of making good investments and getting into real estate just as the values were beginning to soar. Ten years hence, as we continue to embark to the land of opportunities, the question that begs to be asked is If you work in the US for a couple of years, can you buy a house in Malleswaram like before? The answer from even the most optimistic person in the world would be a strict no no. Why? A single bedroom flat which used to cost about ten lakh rupees ten years ago, now costs about forty lakhs. Prices have shot up in the most unthinkable manner. The difference is, an employee in US gets the same amount as what he was getting ten years back. He is not making any extra bucks that would help him elevate to a higher standard. The quality of life here has not changed a bit. But in India, the glamor factor has wowed the common man in such a way that glossy malls, imported cars and a lavish lifestyle have just got embedded in day to day living. Everything is affordable even though it has become costly. People do not think twice to spend on something totally unnecessary. The purchasing power of the public has become magical. But, the bottomline is, all these things that are affordable do not tell the true story of the Indian economy. There is no concept of savings, as everyone looks to thrive on the present than worry about the future. The market is luring the public with the gettable items leaving them with a mountainous task when it comes to building a house.

Now, it is just too clear to notice that two years of good savings here in the US cannot buy you anything grand in India. You just have to bide your time in the US to create a wealth of fortune before heading back home. Of course, if you want to settle here, there is no point in worrying about what is written here, else, like Prasad says How I wish I could go back in time!!!


  1. India economy presently is on the upswing.This is actually a boom type of situation and has been going on for quite sometime. The previous UPA government did try to take advantage of this with the "INDIA Shining" campaign.
    Earlier there was the concept of hoarding(gold,assets,real estate, etc etc). This is slowly dying out and being replaced by the Credit Card.
    Now the whole idea about credit cards are that they keep money in circulation.The economy thus automatically booms when there is a lot of monetary activity going around.
    In the end the Indian Economy looks to be heading in a similar direction like the US Economy.i.e. The 3 H's are going to be very very expensive (Housing,Healthcare,Higher Education)
    Oh and any US citizen/NRI would confirm my views too that buying real estate in prime Manhattan/Miami is going to cost you an arm and a leg and then some more too.

  2. First ban non-nationals from investing in India be it on real estate, stocks or any other property. These people are the main cause for the inflated real estate.

  3. by non-nationals i mean Indian born / Indian origin ppl.

  4. I agree with you man..Bangalore was actually a retirement city even as recently as 10 years ago where most houses had people who owned a Bajaj Chetak and who would have spent five decades working for HMT, ITI, HAL or any of the other PSUs..But Bangalore today has gone beyond recognition of the garden city..forget building a house, you should be able to recognize Malleshwaram when you go back..i found a hell lot of changes when i went to Bangalore after 3 years...I think the IT boom has done 2 things to Bangalore: It has altered the demography of the city (i heard a lot of Hindi being spoken) and it has made people very reckless as far as spending money a result, companies are not hesitating to hike prices of everything from milk to cinema tickets(who will shell out 250 Rs. for a 90 minute show man? i wouldnt, but people are doing exactly that in Bangalore)..It is a sad state of affairs and the point is how much ever you try and not be a part of the herd, it's difficult to stand your own ground given the fast-paced life people lead there

  5. Abhishek: This blog is about buying a house in India, not in Manhattan :-)

    Prasad: That would hardly solve your problems. People who are in the IT sector in India are enjoying the honeymoon now!

    Sanjeev: First of all,I welcome you to my blog! Good to have you here!! What you say is perfect! Especially the part about hearing Hindi wherever you go in Bangalore. I think gone are the days when people used to converse in Kannada. Everybody is ready to forego the state language now unfortunately, thanks to the influx from other parts of the country. I think planned development is the need of the hour!!!

  6. I agree with you totally GK. Its not the Bangalore that we grew up in. It does make me a little sad. As for people spending crazily, I could'nt agree more. I guess the advent of call centers for example gives fresh graduates(irrespective of their major) lots of money and way too that they can't really understand the value of money...It was never like this before......

  7. Madan Sir: Bottomline is simple, Bangalore is not the way it is now. Rapid money making techniques in the offing!!!! I just want the Bangalore of the late eighties or early nineties!!!

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  9. hi..i came by ur blog as I was searching how much it wud cost to build a u ve written is very true..and now in 2010 it has actually doubled tripled!!