Housing and realty: Policies and dynamics of urban economics in Indian capital cities

Growing urban population and government policies are compelling factors for making real estate development an engine of economic growth in India. Major government initiatives for creating opportunities for real estate investments are: development of capital cities for reorganized states, new agriculture marketing centres, large industrial parks, promoting Information Technology and its enabled services hubs. Each of these initiatives has attracted real estate investments including housing sector. However, the most potent factor among these, consequent to political aspirations, is development of new towns as capital cities at different intervals after independence. India reorganized its States after unification of princely states and their respective capital cities were re-designated as capitals attracting large working population in diverse sectors. Huge finances were made available to city administration for developing social and physical infrastructure including land for housing to meet housing demand. To promote investments in housing sector policies were framed from time to time. The National Urban Housing and Habitat Policy (2007) emphasizes on providing affordable housing and recognizes role of public and private sector to wipe out a housing shortage of 23 million units requiring invest of over US $ 834 Million by 2017. In realty, a conjoint role of four actors- land owner, investor-land purchaser and developer; facilitator-the Government and buyer of serviced land require appreciation for hedging investment risk in housing sector. During buoyancy all the four actors are comfortable. But during recession investor suffers losses and craves safe-guards. Player of limited holding capacity is the worst hit. Even large corporate houses are not immune to risks. Providing serviced land is the most challenging urban function for meeting housing aspirations in the changing urban economic scenario on one side and securing investment on the other side of the same strand. This phenomenon seeks policy flexibility tagged with urban economics to protect real estate investments in housing for all. This paper will examine the new investment centres-the capital cities vis-‡-vis the policy provisions of each state. Furthermore, this paper provides insight into the required safe-guards for investments made during adverse economic times.