|May 5 2007, 11:27 AM||#1|
Shackles of the Third World
Half of the most expensive homes sold in London are bought by rich foreigners but this is not allowed in India thanks to a Third World mindset....
A foreign company like Vodafone can buy up an Indian telecom company for Rs. 45,000 crore. But a foreigner cannot buy an acre of agricultural land in India. If he wants to buy a house, a maze of government regulations discourage him from doing so. A Third World mindset causes India to believe that its land and housing stock should remain in Indian hands. Contrast this with the advanced world where homes, castles, and even islands are freely bought and sold across continents.
Australian real-estate companies advertise in Indian papers urging Indians to buy land in Australia. Foreign buyers accounted for one-fifth of the homes sold in Singapore last year Most of the buyers were Indonesians and Malaysians, but they also included Indians who picked up 556 units. Half of the most expensive homes sold in London are bought by rich foreigners. Any foreigner with money can book a property in Dubai and pay for it online.
Thanks to this, the real estate market booms overseas while it has not even been tapped in India. By shutting itself out from the world real estate market, India hurts itself grievously The Western world is full of rich adventurous people who scout the planet for second or even third homes. Who knows, if India liberalised its real estate sector, rich India-loving Westerns could snap up and restore some of the hundreds of crumbling palaces and havelis of Rajasthan. They could buy vacation homes in Kerala and in the Himalayas. But suffocating regulations shut them out. One rule permits a foreigner to buy 25 acres and more of land or 500,000 square feet of built-up city space. But if he wants to buy an apartment, he has to fulfill a dozen onerous conditions. The regulations are absurd. In Goa, a foreigner is required to spend 182 days of a financial year in the state before he can buy a property there.
Another rule forbids him from renting out his property Why on earth would somebody buy a house if he cannot earn from it when he does not use it? Essentially India's realestate rules discriminate against the small man. The owners (the government) of Maruti Udyog Ltd. or Anchor Electricals have the freedom to sell their companies to foreigners for thousands of crores. But an owner of a Vasant Vihar apartment does not get a well-paying foreign buyer for his flat because rules scare the foreigner away. Contrast this with tens of thousands of property owners in Spain, Portugal or Greece who sell their properties to rich Britons, Germans, Swedes and Dutchmen wanting to flee from the cold of their countries. Lower living costs have tempted thousands of Americans to buy homes in Mexico and settle there. Thais settle in Australia and Australians settle in Thailand. Some 132,000 British pensioners stay permanently in the US, and another 74,000 in Spain. But only around 5,000 British pensioners stay permanently in India, thanks to India's inhospitality to foreign stayers.
House sales to foreigners are so routine in the Western world that Spain has a special 'residential' tourism department to promote the sale of second homes. Property sales to foreigners do not even trigger a ripple in these countries. In fact, foreigners routinely buy cast1es and other historic estates in Europe. This is because a castle in Europe can sometimes cost less than an apartment in Manhattan. Go to the Net and you find scores of islands for sale all over the world from Thailand to Canada. India should learn from these countries. Take our crumbling palaces. Letting foreigners buy them will enrich both India and the impoverished royals who own these palaces. The royals will get good money and new owners will restore our palaces. This happens with castles in Europe and it will happen with our palaces in India. India's real-estate sector surely needs to be freed.
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