
Why are more than 10M homes vacant in India? - koolhead17
http://www.bbc.com/news/world-asia-india-32644293
======
chdir
For a working class person with no black income (unaccounted/un-taxed), home
buying experience has deteriorated in this housing boom. Builders often don't
sell you directly. They forward you to a middleman/broker. You are shown the
least desirable units as "available" & the rest all sold out (a lie). You are
expected to pay a sizable portion of the price as black money (could be as
high as 60%). The promised completion date drags on for years. The whole real
estate boom is targeted & fueled by black money owners.

Edit: And there are umpteen number of violations of regulations for
earthquake, fire safety, building laws. Almost all builders double sell you
the common land in the name of "reserved parking", clearly considered illegal
by the court.

~~~
cubancigar11
It is completely true. Actually, most of the problems in India can be traced
back to previous generation (current old generation). They:

1) Did the most corruption. It wasn't that bad before it.

2) Created all the draconian laws to 'correct' Indian culture.

3) Put pressure on current generation to 'own a house' at the age of 25-30,
while they themselves like all the people before them got their house at the
ripe age of 50-60.

4) Themselves a product and participant of socialist government with anti-
private business attitude, they increased the age of retirement for government
jobs. You meet one government employee and tell him/her that you work for some
IT company and they will mock you for 'getting undeserved salaries' and 'being
ignorant of bureaucracy', whether it is for getting a passport or driving
license.

~~~
dman
Do you think there are meetings and secret societies where the older
generation coordinates to plot the down fall of the newer generation?

~~~
sswaner
Maybe BJP and Congress are the groups you label "secret societies". It is not
unheard of for parties to cater to the political views of their most active
constituencies.

~~~
cubancigar11
Thanks. It should be understandable that young people do not have enough
patience to get what they want by way of voting or talking to MLA/MPs.

------
netcan
This level of reporting is really silly. I'm always surprised how common it is
to print a bunch of facts and/or speculations/opinions loosely wrangled
together with two-bit economics. It's really insulting to the reader.

Even psychology doesn't get this kind of abuse. Can you imagine an article
that lists off divorce rate, some happiness survey, psychiatric drug
statistics and ties it all together narratively with a single-sentence theory
about 21st century loneliness, stressful work lives, the trouble with living
online social lives or anything else that an average tabloid reader might
suggest as a reason.

Here we have some suggestion that tax evasion is involved, some stats about
housing shortages, slum housing and no information relevant to the obvious
question: why do people buy flats and them leave them empty?

Come on BBC.

~~~
eli_gottlieb
>Can you imagine an article that lists off divorce rate, some happiness
survey, psychiatric drug statistics and ties it all together narratively with
a single-sentence theory about 21st century loneliness, stressful work lives,
the trouble with living online social lives or anything else that an average
tabloid reader might suggest as a reason.

Yes, that's pretty normal actually. People even think it's quite intellectual.

------
npalli
I was curious and looked at vacant homes across the world.

So the US has about 13 Million vacant homes (with 1/4th the population of
India). [1]

China has anywhere from 69 to 85 million vacant homes (approx. same population
as India)

EU has about 11 Million vacant homes (with 40% of the population of India).
[3]

I would say a lot more fine grained analysis is required to say if this is a
problem or not.

[1]
[http://www.census.gov/housing/hvs/files/qtr113/q113press.pdf](http://www.census.gov/housing/hvs/files/qtr113/q113press.pdf)

[2]
[http://www.theguardian.com/society/2014/feb/23/europe-11m-em...](http://www.theguardian.com/society/2014/feb/23/europe-11m-empty-
properties-enough-house-homeless-continent-twice)

~~~
chappar
>>China has anywhere from 69 to 85 million vacant homes (approx. same
population as India)

I am not sure I understand this calculation. India's population is more than a
billion

~~~
npalli
I meant China has approx. the same population as India.

------
cies
> Why are more than 10M homes vacant in India?

So why? BBC basically answers with the following: because some people earn
more money this way. Tell me something new BBC.

Let me posit another reason: because squatting these empty houses is not
allowed.

If squatting these long-term empty places was allowed they would be:

1\. sold/rented at a more fair market price,

2\. squatted (in which case they are also not empty anymore).

~~~
golergka
Well, let's just throw out the whole private property concept while we're at
it, why not?

~~~
jaredklewis
Is squatting totally incompatible with property rights? Until several years
ago, I believe the Netherlands had quite strong squatting rights in addition
to basic property rights.

Property rights in most countries are mitigated by a variety of competing
communal rights such as eminent domain, zoning, and environmental laws. I
think squatting rights could potentially protect communal rights in a similar
way.

~~~
nine_k
Squatting definitely _limits_ your property rights. Imagine that if your
backpack is vacant for some time, and someone put tacitly someting into it,
you'd be legally obliged to carry it around.

I suspect that squatting rights only affect obviously neglected property. I
suppose the empty houses and apartments are reasonably guarded and are not as
neglected as a closed and half-dismantled building. Also, squatting does
damage the property, hopefully in minor ways. Imagine that your empty backpack
was loaded with pizza slices: totally benign, but you'll have to clean the
backpack thoroughly.

------
yalogin
The main reason is that renting out these houses is not safe at all. Many
middle class people fear that the renter will occupy the house and not move
out. It happens all too often apparently and given the entirely corrupt law
enforcement officials and idiotic laws home owners would rather lock it up
than renting.

~~~
netcan
Why would you buy it then?

~~~
cubancigar11
Land is a boom waiting to go bust. Unfortunately, most naysayers are currently
basking in seriously ridiculous amount of cash :P

------
foolinaround
the major issue not mentioned as to why these homes are vacant is the problem
of eviction of tenants.

The laws are so lax that folks often buy property with clean money, and just
keep it locked up rather than realizing the rent potential.

The growth in prices has so far ensure that even then, buying and locking up
property is lucrative.

~~~
brickcap
This is very true. I have known tenants who adversely possess the property and
make owners fight for decades before they are evicted. Generally as long as
the tenant is paying rent there are very few grounds on which he can get
evicted.

Most of laws favour the tenants(in one sense it is right) but it is not
uncommon for them to take undue advantage. And people who rent without a
contract of some sorts usually pay the price. Most of them though would rather
prefer to keep it vacant than put it in any danger of dispute.

~~~
kamaal
>>Generally as long as the tenant is paying rent there are very few grounds on
which he can get evicted.

Not exactly, Most people make the tenants sign a 12-18 months rental
agreements these days, with a very heavy deposit amount in cities in
Bangalore. Those agreements are pretty serious legal documents.

~~~
brickcap
>Those agreements are pretty serious legal documents.

I agree :) what I am saying is, my observation has been that many people don't
do agreements. If you have an agreement with an express expiry date (12-18
months as you say) it is all good. Most people don't. For many people the
problem is lack of knowledge. For something as ordinary as renting they don't
even consider the need for going to a lawyer/agent and getting a contract
done.

What you say about Banglore is opposite to my observation and it makes me
happy that people there are smart enough to enter into a contract before
renting their house. It is good both for the tenant as well as the landlord.

Noida is also a pretty popular IT city and people renting out their homes make
no contract. Even in my own city (gurgaon) letting without a contract is
pretty common. Mostly there are no disputes. But when there are they are long
and bitter.

------
linux_devil
Investments in property is booming in India . Don't know if it's a bubble or
not . But I cannot afford one right now (not even as investment ) , reason its
too expensive and loan is not my cup of tea and I think investing same money
in your own startup will be worth more ( as experience)

~~~
VLM
"I think investing same money in ... startup will be worth more"

You are correct on a micro-level but there are also macro-level issues when
capital and rent (rent of money) are tied up in non-productive assets. An
individual who buys a $1M house cannot put that $1M into a startup, but also
on a societal level a bank that loans $100M of mortgages cannot loan that
$100M to build infrastructure or a new manufacturing plant or a (large)
school. So high price of non-productive assets hurt the macro scale as much or
more than it hurts micro scale. Its very bad for the economy when the best
thing to do with a pile of money is buy something that doesn't produce
anything or grow anything. Its as bad economically as stuffing the money into
a mattress.

~~~
alextgordon
> on a societal level a bank that loans $100M of mortgages cannot loan that
> $100M to build infrastructure or a new manufacturing plant or a (large)
> school

As a technicality, the whole point of modern banking is that banks can loan
out the same money over, and over, and over again.

So in fact you can eat your cake and have it too.

~~~
VLM
There are limits to that of course. Aside from that, I don't think it changes
the bigger pix that "everything" involved in making a non-productive capital
investment is unavailable for productive investments. Can't build a rail line
thru there, can't that wood and stone into an office building. All that energy
and labor invested, you're never going to get a return on that.

I'm not saying a world devoid of art and fun is a good goal, but am saying
that going way overboard to one extreme is going to result in blowback.

------
somberi
It helps to think of these "vessels" that conduit black money not as Houses in
the strict sense. From a policy planning perspective it helps to remove the
errant variable (in this case excess of homes).

------
gamekathu
same situation in US or other "First World" countries - nobody bats an eye,
and if in India : "Everyone loses their minds!" Just Saying

~~~
XJOKOLAT
I would suggest that:

1) It isn't the same situation. The level of corruption and absolute poverty
levels are not comparable.

2) Where there are similarities in "first world" countries (e.g. empty housing
stock), eyes are very definitely batted. At least in the UK.

3) I would argue that 10 million empty homes in India, where there is
significant slum situation, which is basically accepted and regarded as
"normal", even in the capital city, is more eyebrow-raising than an empty home
situation a "first world" country. I don't actually see anyone losing their
minds though.

~~~
cpncrunch
Similar situation (apart from the corruption and poverty) in Vancouver.
Average detached 2-storey home price is $1.27M, average condo is $506k. It's
completely unaffordable by the average working person. Lots of condos are
purchased by overseas investors and left empty.

Also, I'm not entirely sure why 10 million empty homes in a country with 1
billion people is a big deal. That's just 4% of the housing stock (assuming
average of 4 people per home). There seems to be an assumption that you can
just put the slum dwellers into the empty condos, which doesn't necessarily
seem realistic. (I'm not saying that they shouldn't get decent housing, but I
think it will need to be done in a different way).

------
kamaal
This largely because these are high rising apartments on the outskirts of
cities, purchased with an intent of renting them out for side income. The net
result is there are too many of them. And since they are far away from
schools/hospitals/markets and other amenities, nobody really opts for rent in
these places. Eventually as the cities grow this may change, but note as time
goes your apartment ages too(and so does its value). There is a huge debate
whether as to buying an apartment is a better idea or a buying a plot given
these circumstances. Every one wants a rent income, very few want the struggle
of buying the land, protecting it from encroachers and build it later[which is
an circus in itself], most want a ready made flat. Both have their own
advantages and disadvantages. Like in all cases good investments are a lot of
hardwork and stressful.

Inside the cities houses are always in epic demand. The situation there is
totally different.

------
aaron695
As a logic experiment for people in well off countries have a think about what
would happen if people built 10 million mansions and left them empty.

Firstly it wouldn't happen even with black money. There's no point having
assets you can't use. You're better off just paying the tax and collecting
rent.

There'd be a lot of jobs building them.

And the housing market would become cheaper since they have to be sold at some
point.

This is a pretty awful BBC, quoting some sort of site, that quotes a Managing
Director of a large property constant.

The firm doesn't seem to have produced a report, it seems to be based off an
interview, or just a comment of some sort.

[https://twitter.com/cbreasia/status/593669907172237312](https://twitter.com/cbreasia/status/593669907172237312)

------
xnull2guest
This reminds me that both India and China are building a huge number of cities
all wired up to collect data on everything, so that they can be micromanaged
and studied.

Modi promised to build 100 "Smart Cities" \- a lot of it with foreign and
private investment dollars.

~~~
miji
yeah, its called system science

~~~
xnull2guest
It was my understanding that Smart Cities were a new and exciting concept. But
yeah, systems science is going to play an important role.

~~~
yummyfajitas
I interviewed once at a company helping to build "smart cities" in India and
in Malaysia. The idea sounded really cool, and I'd love to do statistics for
something other than making people buy stuff online.

They actually just wanted a white guy with a Ph.D. to schmooze with clients,
and were willing to pay 8 lac/month for it. It was unclear what "smart city"
meant to them - the best I could tell it was just spinning up a hadoop cluster
to big data the traffic light control systems. (Smart traffic light controls
already exist and run perfectly fine on a laptop.)

~~~
VLM
"It was unclear what "smart city" meant to them"

Maximize tax/fee revenue while minimizing operating expenses to reduce the
standard of living of all residents as low as possible in an individualized
detailed manner just barely above rebellion or property abandonment, at least
in practice. Then sell it to the rubes as being a social or cultural change
where you can ignore all the tech its going to be the first city on the planet
where human nature took a day off and we'll all live together in perfect peace
and harmony. Sell the financial benefits "rich get richer" and all that to the
leaders, sell a line of BS about human nature changing to the rubes. Its
basically an atheist cult in the sense that it operates as a traditional cult
WRT somewhat extreme exploitation of the participants, but subtract the higher
metaphysical beings marketing message that cults have, or insert big data /
big government itself as the higher metaphysical being.

Its like the dichotomy of internet of things. What you ship is a fridge where
corporate sends a special packet to make the compressor burn out when
quarterly sales are below their target while selling all formerly private
personal data gathered to every corporation on the planet for whatever you can
get. What you sell to the rubes is fuzzy bunnies of the corporation caring
about your organic nutritional needs by ordering orange juice from peapod
automatically when it detects a low level or monitoring for expired food or
the "wrong" beverages stored inside.

The similarity is the message has nothing to do with the purpose or operation,
at a level of dissonance never before seen on the consumer markets.

~~~
yummyfajitas
If it were anything like what you describe, I'd probably have given a lot more
consideration to joining. Your proposed policy is likely to be superior to
democracy - democracies like Detroit can't even maintain standard of living
high enough to avoid abandonment. Plus you can avoid a lot of rent seeking -
if consumer surplus can be created by a massive increase in housing (ala SF,
Mumbai), locals don't get to vote for rent seeking policies.

In reality they didn't have anything remotely so coherent. It was just a
variant of "lets hadoop all 200mb of our big data into the NoSQL for business
intelligence insights".

------
bandrami
Are they counting the vacant half-built chawls in neighborhoods like
Chinchpokli or the dockyards? I'd never seen so many half-completed and
abandoned housing projects until I moved to Mumbai.

~~~
kang
Come to Noida. Advise is you better do not.

------
skbohra123
An article without much substance, just couple of figures and speculations but
no deeper study.

