Some people living in small flats struck lucky in Mumbai. Their 1 Bedroom flats (1 BHK, as it is called) went for as high as Rs. 4.5 crores or $9.8 million.
Residents of a Khar housing society received high prices for their 1-BHK flats when the city based Parinee Developers spent between Rs. 4 crore to Rs. 4.5 crore for a one-BHK flat and Rs. 5 crore to Rs. 5.5 crore for a two and-a-half-BHK.
That’s a huge sum for a property in any country or city! The reason that the developer, Parinee Developers gave was that the society had not fully utilized the floor space and was using just 40% of its Floor Space Index (FSI).
The society comprising six buildings, each ground plus two floors, is spread over an area of 5,570 square yards (over an acre) with ample open spaces and car parking. The one-BHKs have a carpet area of between 580 to 625 sq ft while the two BHKs are between 800 to 900 sq ft in size.
The property market in India remains artificially inflated and stacked against the middle class. Major reason is the lack of land reforms to redo the laws which are stacked heavily against the property owners and in favor of the tenants and usurpers/criminals. It is difficult to believe that Indian Property laws and Supreme Court citations were written by bonafide and intelligent members of a society!
If a society cannot protect the right of ownership and be able to assign the right to where it belongs, then the society as a whole – more so the poor – pay a heavy premium for the inequities and inefficiencies that are born there. Hernando de soto sums it up really well in his book “Mystery of Capital” (a pathbreaking work in unlocking the power of assets in an society):
This is the mystery of capital. Solving it requires understanding of why Westerners, by representing assets with titles, are able to see and draw out capital from them. One of the greatest challenges to the human mind is to comprehend and to gain access to those thigs we know exist but cannot see.
Unless our laws in India can do so, the incredible situations like the above will keep persisting.