Fascinating article in the NYT about booming property values in desirable areas of New Delhi, where teardown properties can allegedly go for over $10 million.
There are some specific points in the piece that do not bode well for India's chances develop.
First, the best areas of New Delhi seem to be government owned and given out to politicians as perks:
Few properties come available in the leafiest, most prestigious section of the capital, known as Lutyens’ Delhi, because the area is mostly dedicated to government housing. Powerful government ministers live in British-era bungalows with stately lawns of several acres, while lesser officials are eligible for different categories of government housing in an oasis largely separated from the rest of the chaotic capital, where many people live crowded into slums or shanties.
“This is the best part of Delhi, the core of Delhi,” said Munish Kumar Garg, who oversees the allocation of government housing. “If these properties in Lutyens’ Delhi were put on sale, there would be a queue two kilometers long.”
Mr. Garg, the director of the government’s Directorate of Estates, controls one of the more valuable residential real estate portfolios in the world. Asked how many New Delhi properties fell under his agency, he shrugged. “It would be difficult to know,” he said. “Maybe 10,000.”
Yes, in 2013, the Indian Government is managing 10,000+ residences for government employees, just in New Delhi.
Second, the process of buying a house is not extremely transparent. There aren't often public real estate listings and purchases frequently require large amount of unreported cash payments that avoid tax issues:
Though India’s economy has cooled, the demand for property in elite areas remains so strong that even finding a house for sale is tricky: formal listings do not exist; prices usually circulate by word of mouth. Transactions often require some “black” money, or stacks of cash paid under the table to avoid taxes.
The buyers are often Indian industrialists looking for a trophy property, a real estate Rolex. Or, real estate agents and sellers say, they can be politicians or their proxies, who often pay with trunks of cash.