Here’s
an interesting article (from “The New York Times”) about real estate in the
heart of government Delhi:
March 2, 2013
Think New York Is Costly? In New Delhi, Seedy
Goes for 8 Figures
Enrico Fabian for The New York Times
SOLD: $29 Million This crumbling home from the British Raj, in
New Delhi’s most prestigious section, commanded top dollar in a public auction.
NEW DELHI — The
fading bungalow at 38 Amrita Shergil Marg does not immediately shout real
estate bling.
There is no tennis
court, no infinity pool, no Sub-Zero refrigerator or walk-in closet. The paint
is chipped, the bathrooms are musty and the ceilings have water stains. The
house may ultimately be torn down.
Yet when it went
up for public auction, the winning bid was almost $29 million. And many
neighbors consider that a bargain. One block away, a gracious if not quite
Rockefeller-ready residence once leased by the Mexican ambassador is now
reportedly on the market for more than $100 million. Other nearby houses are
going for $40 million to $70 million.
Enrico Fabian for The New York
Times
A government car cruised past a building dating to
the Raj in the Lutyens' Delhi section of the Indian capital.
“The price of the
Mexican residence is $110 million,” said Jorge Roza de Oliveira, Portugal’s
ambassador to India. “You can buy a home in New York and Miami and Lisbon and
London and keep a lot of change for that much.”
Real estate prices
in the heart of New Delhi, especially for the bungalows built nearly a century
ago during the British Raj, are among the highest in the
world.
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.
For their money,
buyers get a lovely piece of land and a piece of history, if not much in the
way of amenities. Many houses require a major overhaul. Services, if far better
in these elite areas, are still inadequate: drinking the tap water is not
advised, and power failures remain an irritant.
The obvious
question about the prices, in a country where hundreds of millions of people
still live on less than $2 a day, is: Why?
To a large degree,
India is experiencing the sort of real estate boom common to big, emerging
economies. When Japan’s economy was soaring in the 1980s, prices in Tokyo were
so frothy that the 845-acre compound of the Imperial Palace was valued at more than all
the real estate in California. More recently, China has seen a boom,
with real estate values rising in some cities by 500 percent.
But the spike in
New Delhi is also being fueled by ego, status and some unique distortions in
India’s economy. 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.”
It was a British
architect, Edwin Lutyens, who in the early 1900s designed what is now the
governmental heart of the capital. Beyond the grand buildings erected as the
seat of British imperial power, Mr. Lutyens and other architects also built a
residential bungalow zone of whitewashed single-story homes surrounded by
verdant gardens. When India won its independence in 1947, the British moved out
of many of the houses and the Indians moved in.
Today, power in
Delhi can be measured by where a politician lives. The Directorate of Estates
divides properties into eight categories, with Category 8 bungalows, the most
exclusive, reserved for ministers and other top leaders. Former prime ministers
and presidents, and their spouses, are allowed to remain in Category 8 housing
until death.
Given the shortage
of such housing, the recent death of former Prime Minister Inder Kumar Gujral
has spurred jockeying over who will get the bungalow.
Navin Chawla, who
was India’s chief election commissioner from 2005 to 2010, lived with his wife
in a Category 8 bungalow on six acres, with accommodation for 17 servants,
including a separate house most likely worth many millions of dollars. When his
term ended, so did his tenancy.
“I have to tell
you, these homes are very timeless,” he said, sounding wistful. “It’s a bonus
of the job to get a six-acre property for five years, one of the few bonuses of
being election commissioner, I can tell you.”
Not surprisingly,
as Indian industrialists have amassed great fortunes in recent years, the
temptation to buy into a zone where status is so nakedly demarcated and only a
few hundred private properties exist has proved irresistible. Property values
in the Lutyens’ bungalow zone, as well as in nearby neighborhoods, have
appreciated steadily for many years but skyrocketed in the past decade.
In some cases,
families have held these private houses for generations. Many were refugees
from Pakistan after partition in 1947, when streets like Amrita Shergil Marg
were hardly exclusive. Veena Kumar’s parents arrived almost penniless in 1947
and rented a bungalow on the street for about $5.50 a month, before buying it
eight years later. In those days, the house was at the southern rim of the
city, beside what is now Lodi Garden, which is known as the city’s most
beautiful park but seemed like jungle back then. Longtime neighbors recall
hearing the cry of hyenas at night.
Now the house lies
in the heart of the city and Ms. Kumar and her sister are looking to sell. Ms.
Kumar declined to discuss her asking price, but local media reported it as
about $55 million.
“One cannot afford
these taxes,” she said, explaining that the upkeep and property taxes had
pushed her to sell. “It is very expensive.”
The wild prices
have also affected the rental market. For decades, owners happily rented to
ambassadors or diplomatic missions. Now, rents have jumped so sharply that some
ambassadors are moving. Mr. Oliveira, the Portuguese ambassador, recently
relocated after his rent soared. Mexican ambassadors had lived at 13 Prithviraj
Road — the house priced at $110 million — for a half-century, with the original
lease signed by Octavio Paz, the Nobel Prize-winning writer
and poet who was Mexico’s ambassador in the 1960s.
(The United States
Embassy is a beneficiary of the rising real estate values, because for several
decades it has owned several residential properties in elite areas.)
Rahul Rewal, a
local real estate agent, said that demand was pushing up prices all over the
capital region and that the Lutyens’ zone actually was a safe investment, since
values keep going up, partly because so few places come onto the market.
Fifteen years ago, the telecommunications magnate Sunil Mittal paid about $6.6
million for a property on Amrita Shergil Marg that he razed and rebuilt. At the
time, the price was astonishing; today, it would be a bargain.
Mr. Mittal’s
brother, Rajan, was the winner of the auction for 38 Amrita Shergil Marg.
The property had
been entangled in a family legal feud for three decades until a judge ordered
that the property be sold at auction, with the proceeds divided among family
members. Had it been sold privately, many neighbors and brokers say, the final
price would have been higher. To avoid taxes, many sellers demand huge, secret
cash payments to supplement the publicly recorded selling price.
Even now, the
owners are still bickering. G. K. Gupta lives in the front half of the house,
while his nephew Shivraj Gupta lives with his family in the back half. The
uncle is in favor of the sale, but the nephew says he is still challenging it
in court. And though both would be wildly rich when the sale is completed, the
elder Mr. Gupta said that kind of money only goes so far in New Delhi.
“I’ll have to
invest it in property,” he said. “And property is very expensive in New Delhi.”
