https://epaper.timesgroup.com/Olive/ODN/TimesOfIndia/shared/ShowArticle.aspx?doc=TOIGO%2F2018%2F01%2F20&entity=Ar00400&sk=BBF14B11&mode=text
For 20 years, Goa’s property prices only rose. The only question has been how fast rates will tick higher. Sums demanded and received per square metre more than quadrupled in two decades in a market fed by rapacious demand from the newly moneyed classes of India. Everything on the market went incredibly fast, from tiny flats in giant complexes to every size of village houses, to all categories of land. This has been a lawless gold rush, exactly like the broadest excesses of illegal mining that used to rule in India’s smallest state. Every possible norm has been routinely flouted. The entire regulatory system has become riddled with corruption. A pernicious builder-politician nexus now reigns. Exactly the same happened everywhere else in India, so it would be unrealistic to expect vulnerable little Goa to fight off powerful forces that have already subsumed the mega cities of the subcontinent such as Delhi, Mumbai, Bengaluru, Chennai and Hyderabad. This tiny state’s real estate demand has been buoyed by ceaseless growth in the rest of the country. New-build flats and condominiums in the state were grabbed en-masse by metropolitan Indians seeking second or third homes, while heritage houses and other larger (and much more highly priced) properties found ready buyers from the rapidly burgeoning wealthiest “one per cent” of the country. Just as the Goa property boom was always directly correlated to what happened in the rest of India, there are now glaring signs that decline is on the way. Home sales around the country dropped steeply in 2017 to the lowest level recorded in almost a decade, nearly 40% lower than 2011. According to property consultants Knight Frank India, consumer confidence in real estate has plummeted. New home launches are dramatically reduced in all major marketplaces, down by over three-quarters. Sales have declined for seven years in a row. Average home prices actually slipped lower, 7% in Pune, and 5% in Mumbai. For at least a decade, many red flags were raised about India’s property bubble. It has always been apparent it is the beneficiary of much of the country’s unaccounted money. Across many markets, including Goa, there has been a mystifying disconnect between rents and property values, where the former remained stagnant even as buyers kept paying more to own. This goes against every economic guideline, and is the clearest possible indicator that real estate became a place to park undeclared cash. Add up environmental devastation and the devastating social damage suffered by communities subjected to unwanted real estate construction, and the real costs of this artificial bubble’s alleged “development” are staggeringly high. The greatest tragedy of the 21st century is watching so many countries pursue proven failed models like so many blindfolded lambs to slaughter. There was no reason for Goa to follow the very bad example of cities gone mad with construction such as Delhi or Bengaluru. Charles Correa repeatedly warned Mumbai about its inevitable fate if it did not seek enlightened urban planning solutions (which he offered), but the city heedlessly ground its own future into dust. Now, it seems the late architect’s own homeland will also ignore his advice and counsel, shelve his recommendations and hurtle headlong to inevitable collapse. Here, it should be noted that India mindlessly follows China, which is repeatedly cited as the example to be emulated. The heavily touted ‘Gujarat model’ is minutely modelled on what Asia’s biggest country has done for its citizens. This also extends to creating, ignoring and denying unlimited pollution and hazardous industrial side-effects, as well as a myriad other negative aspects. All this is especially relevant to real estate and the property bubble, which rose to unprecedented levels in China, eventually accounting for over one-third of its historic GDP rise to signal its emergence as a world power. Just like in India, the boom was lifted by pure speculation and heaps of bank debt. But then prices stabilized, and again, eerily like across the border in cities like Mumbai, they slid appreciably last year. Now there is a panic and fear about a crash on the scale that would easily bring down entire national economies with it. But Chinese investors are lucky. The omnipresent state has both, will and wherewithal, to weather the most severe financial storms. There are no similar safeguards in India, which shows all the same dire warning signs as its giant neighbour.