Wednesday, January 7, 2009

"What is come first egg or hen.?"

Does overall economic development stimulate the real estate or real estate stimulates the economic development?

In this world such questions r twist our minds:

An year ago, nish asked the question,"What is come first egg or hen.?" on Yahoo India Answers.

Out of 27 answers nish thought that Sherlock Holmes' answer "If you go by sequence in your question, egg.", was the best answer.

In his comment nish said "u r correcr .i ask simple Question,but people makes it complicated" and he declared that his question is resolved!

If belive God created the world, then hen comes first.

If nish had been from "Indian real estate sector", i am sure, he would have chosen the answer, "If belive God created the world, then hen comes first.", given by Smile- conquers the world.

Because, Indian real estate developers believe that they are here to complete the work of God. He created every thing, land, plants, animals, rivers and hills but homes. Builders are completing God's unfinished job by building homes and doing a great favor to human beings which otherwise would have lived in the caves or on the trees!

Considering the financial background of Indian Prime Minister, builders are not talking to him like they talk to their customers, the needy home buyers. They are talking about GDP, economy and employment to explain him what comes first, egg or hen, housing or economic development! Yes! read how Chairman of Hiranandani Developers and Chairman of Unitech are doing their best to explain the divine truth to ex-governor of RBI, International Monetary Fund (IMF) and the Asian Development Bank (ADB) and ex-finance minister Dr. Manmohan Singh!

1) Joining hands for more homes

2) Real Estate: Correct time to innovate

By the way, what is your opinion about builders role in the economic growth of the nation?

Builders are not happy.
Builders are not given proper credit for their contribution in the GDP growth.
Government do not give them the status of an "industry".
Banks find them risky and do not lend funds freely.
Housing group of IT professionals, off course, working in Hinjewadi, complains about being "exploited" by the builder lobby.
Has it ever come to your mind that builders contribute a lot in creating wealth or do you think that they only live off the wealth created by you all?
Please, share your views in the comments! (Comments Policy)

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  1. Ravi....

    A good article. And an exact question I have been asking since last 2 months.

    The RE industry is trying to create an absolutely wrong hype. This is not the case of chicken or hen. Real Estate sector or for that matter any industry for any region is the Gear of economy. But RE industry can not be a blood stream of any economy.

    If a common man can buy a property with OWN MONEY (Note: OWN Money does not include Mortgage Money), then RE industry can become an engine for economy. But in India, RE Industry wants common man to take loan and buy their products. Surprisingly, our government also wants the same. The economic growth thus achieved will be based on credit and it will get busted in the same style that US economy is busted. But Excuse me, for us, it will not take 25 years to bust. Only a year or two will be sufficient.

  2. Real estate in the right sense is a boon to growth - GDP or whatever. Construction activity feeds into steel, cement and other industries and more so in employment to millions of people. Last year Indian real estate contributed to 7% of GDP. India needs millions of homes and real estate should be a bigger driver of growth provided it is moving at a reasonable speed without speculation.

    Are builders responsible for real estate growth, maybe, but anyway every Indian doesn't get Bharat Ratna for doing his bit for the growth while earning his income. Are builders responsible for the mess in RE, definitely yes. See how.

    Just imagine when we started learning an automobile, we just cannot manage clutch and accelerator and vehicle jerked heavily and stopped. Case of our builders is trying to accelerate the prices too much too fast and the vehicle has stalled.

    First, government, people and builders should understand that home is a requirement which everybody needs and not like stock market wherein you can choose not to be in. That means there needs to be policy towars home building. This should make the whole industry viable earning decent (decent, not exorbitant) profits for builders as in any other industry.

    Let there be a capital gains tax of 50% on home sale within the first 10 years. Then let it be 25%. This will keep pure speculators out. Also society is justified in taking part of profit as infrastructure around a home is created by the society because of which appreciation has happened.

    Our RE industry is now controlled by people who are good at bullying customers. As in any business this has to stop and reputed groups should be more involved.

    Always bad money drives out good money. Bad business drives out good business. It has happened in many businesses, more so in real estate. You may wonder why Ramalinga Raju wanted to be in RE rather than in IT?

  3. L Acharya, very good article... keep it up...!!!
    I liked the idea of capital gains tax for first 10 years, it's just spot on :)