The dynamics of land prices

Hyderabad: There is a correlation between property and politics, analysts say. In fact, they move a step forward to say that by now the property bubble should have burst, but still not, only because the politician-builder-criminal nexus is intact. They do not want the prices to fall as it would lead to collapse of their 'benami' wealth. This unholy nexus is prevalent not just in Hyderabad or few Metros its presence is seen across the country. And no one knows, when the bubble will be allowed to burst, like in the case of gold.

Let us see how it works. First, to increase the revenue from property, the government brings in proposal to hike registration charges and stamp duty. But, it chooses to reduce the stamp duty and registration charges in the budget. However, later it decides to enhance the 'land value'. It not only benefits the government in increasing revenue, but also helps the land owners to increase their wealth as the land value increases automatically.

In the last three years, the builders and property dealers have cleverly utilising the Telangana movement to raise the land prices in Hyderabad and other towns claiming that the coastal districts would get prominence and Visakhapatnam would become the capital of separated Andhra state.

Analysts further point out that the political parties focus on municipal corporations to see that they do not raise FSI (floor space index), in order to maintain the artificial scarcity of land in the municipal area. When in the developed countries like Singapore etc, the municipal authorities allow vertical construction not just outward, but even underground also. This would ensure that the land is optimally used and no artificial scarcity is created, but in India we still not learnt lessons.

They say the land and gold price will always have one-way movement: only up. If suppose, there is no manipulation of price.