Wednesday, January 03, 2007

A 10' X 10' shanty in Bangalore is worth more than $22,000!

So says The Hindu, India's most respected daily newspaper. The paper reports that the Karnataka government wants to cash in on the value of the city's shantytowns through a plan that would allow private developers to take them over as long as they provide replacement housing for the squatters.

Here's the relevant stat: "a large number of slums in Bangalore are located in the city centre where land prices have increased in the recent years....[and] the land value of some of the huts (10 feet by 10 feet) in Gandhinagar area has been estimated at over Rs. 10 lakh [for the uninitiated into Hinglish: a lakh is 100,000; 10 lakh is 1 million], although the occupants cannot sell the land as they have no documents for them."

So that 10 X 10 hut is worth $22,600.

Now tell me who benefits if the squatter gets a lousy single-room apartment while the developer gets the rest of the value?

5 comments:

Anonymous said...

The squatter is illegally occupying land. For that he will get a free legal apartment. What more does he want? A palace maybe?

rn said...

No need to be snide. No squatter expects a palace.

If middle and upper class Indian families paid living wages to the people who take care of their kids, clean their houses, act as their chauffeurs, these people could afford the usual property market. But no one wants to pay.

When I was in Mumbai, I knew a woman who worked for two families as a maid and cook. Between the two families, she was paid less than 800 rupees a month. That's less than $18 a month. You tell me what apartment she could rent in the legal area of the city. This is, sadly, a typical story.

The poor are forced by economics to seize land and build these tiny huts. They tend to build on unwanted land or land that's simply unfeasible for development. Later, when developers become interested (in part because the squatters have brought stability to the area) they get forced out of their homes by government policy. Yes they may be given a free apartment--but often way too small for the size of their family. And they lose whatever equity they had in their modest but functioning neighborhood.

Some squatters think it's a good deal. Some don't. Some simply accept whatever is presented because they don't think they can fight for something better.

emmo said...

Hello,
My name's emmo. We working on this community blog here at http://kenyaimagine.com. We are running a story now and the housing shake up in Nairobi. One of our writers thinks that the housing boom in the upper and upper-middle class areas may inadvertently lead to a rise in standards everywhere. This is because these developments have both overshot and oversupplied the market, i.e the new apartments are both fancier than the market demands and more than the market demands.

He contends that as rents fall in these areas, those who previously could not afford decent accommodation will move up, and landlords seeking to retain their tenants will be compelled to accommodate them in better housing.

We hope, we hope.

Your campaign is a noble one, we would be glad to publicise your work on our blog too, although we cannot promise that people will care. In Kenya like most places around the world, being poor means you really do not matter.

rn said...

Emmo:

Interesting idea, but when I took a look at your writer's article, it is more theoretical than actual.

My experience from New York is that the creation of a glut of apartments at the high end of the market does not cause rents to fall in any other sector of the housing market, because affordable rents are still scarce.

People are still building at the top end of the market in New York. The vacancy rate in that stratosphere is high. But rents have continued to climb in both the lower and middle-priced flats.

I'm afraid that housing defies traditional projections of supply and demand.

Let's keep in touch about this.

Thanks.

emmo said...

Hey,
Would you mind putting that comment up at our site? Some of the responses have said something similar, i. e that housing may not respond to market forces, but we hardly have the experience you have had.

Would you be able to do an article on Kibera for us? Again, we may be Kenyans, many of us even from Nairobi but its truly a case of so near, yet so far.

Thank you.