Rethinking Real-Estate

Rethinking Real-Estate: A Cultural Perspective

Prasad Shetty, 2007

Discussions related to real estate seem to have been completely higjacked by disciplines dealing exclusively with finance. This paper is an attempt to relocate real estate from the fortress of finance into a space of cultural-economy. Rather than entering into much-discussed questions of whether the real-estate market today is a boom or a myth, the paper would aim at dismantling existing categories in the subject so as to render it as a cultural entity. I would do the above through a making three arguments –

1. There is no real estate, only real property!

We’ll establish some preliminary common language to begin our discussions. Land is referred to as a piece of surface over earth. Real-Estate is physical land at, above and below the earth’s surface with all appurtenances, including buildings, structures, fixtures, fences, and improvements. Tenure is the relationship between human beings and real estate. Real Property is land or real estate that has claims of tenure. Hence tenure and property cannot exist without human beings. In contemporary discussions, generally real estate is considered synonymous with real property; however, in this paper we will explore the possibilities when they are not considered synonymous.

In India all land is either revenue land or forest land. So it is a property to begin with. If not private, it is under a collective claim. In urban India, the claims over land are complex. However, legalities vary. Claims on land are of various kinds and in various forms. 1) There may be many parties making various kinds of claims over a single piece of land – all coexisting and simultaneous. This means, a person may have acquired a piece of land from the state on lease and then rented it out to a company, which has built houses and shops over it. Hence, all parties involved have various kinds of simultaneous coexisting claims that are not necessarily contradictory or conflicting. 2) The overlap of customary holding of land (either as a community, or as a family or as tillers without rights) with the state enforced system of one land – one party brings about several more dimensions to the complexity of claims. In many parts of pre-colonial India, lands were given by higher feudal lords to lower ones – sometimes to administer, or sometimes to collect tax. The people living and tilling on these lands used to pay tax to the feudal lords. For feudal structure to exist such people were required because, without people, there would have been no produce and no surplus and no feudal lord. Hence, people on these lands were never evicted. As families grew, claims over lands became intense developing complex cultures for inheriting/distributing lands. After independence, the central government was at a difficulty to deal with this situation as dealing with the land issues meant dealing with the cultural issues. The central government wisely left the issue of land to the various states and concentrated on developing other things.  The states on the other hand developed their own variety of land management. While some states undertook a painful redistribution of land, states like Maharashtra tried to manoeuvre the existing systems such that they become slightly just. Hence, there are instances of land being held by a family (of the feudal lord) or a trust or an institution but occupied by some other people. However, the law of the land does not allow eviction of these people. 3) Claims also exist in other ways – by occupation of the property. A person or a group of people living in a place for more than a certain years cannot be evicted. Here various forms of records are held testimony to the claims made – a ration card, an electricity bill, a voter card, and sometimes even a letter delivered by the postal service. Some local governments have even recognised acknowledgements from neighbours as proof of residence. Such proofs become necessary in areas with high land prices and where there is always a threat of eviction.

Hence, it is not possible to talk about land or real estate in their pure form – it is always property. The rendering of property to land and real estate is moreover useful for three reasons – firstly is immediately makes land and real estate as political objects and not merely economical objects. For example, the idea of releasing land for development through abolishing of Urban Land Ceiling Act may seem neutral if seen through the economical lens of demand and supply; but would essentially mean change the tenure relations if sieved through the idea of property, where land is not released at all – the questions of land released for whom and by whom become important here.

Secondly, the idea of property brings about cultural dimensions into the analysis of land and real estate. In the idea of the property, human subjectivity is important, because property cannot exist without a claimant. Hence one may find a rich family preferring to stay in a slum because there is a safety of the community; an old restaurant owner resisting to give up his shop for even an extremely good offer because he has memories of his childhood in that shop; families refusing to move into highly serviced apartments from a dense messy locality because of cultural ties; and even weaver who is not ready to move into another machine on the same floor because likes the window near his machine.

Thirdly, the idea of property makes complex the economical dimensions of land and real estate. The neo-classical methods that allow equating two commodities through money seem redundant when the idea of property is posed. The most popular equation for compensation: X work = Y land / real estate = Z capital seems meaningless. Compensating industrial workers with real estate, or compensating agriculturists with capital seems meaningless as industrial workers cannot handle real estate nor the agriculturists can handle capital. In other words, neo-classical economists wouldn’t dare to articulate the equation X work = Y property = Z capital.

2. Conventions on actor groups in real estate require interrogation

The development of usable real estate requires mobilisation of various aspects – land, title over land, authority to develop, technical ability, material, manpower, machinery, financial resources and managerial abilities. The Developer or the Builder seems to come across as a mega actor on the supply side of real estate capable of mobilising all the above aspects, especially in the urban areas. The importance of the developer as a prime actor is most evident when housing policies of today talk about facilitating housing through private initiatives. On the other hand, the newly emerging middle classes (with their growing incomes) facilitated by the financial institutions (with easy loans) are considered to dominate the demand side.

I had an interesting experience recently with trying to by a house for a friend in Mumbai that toppled my imagination of the builder. We went to a builder developing a property in Kandivali, a suburb of Mumbai and enquired about the rate per square feet. He told us the rate as Rs. 3850. After a lot of bargaining, we realised that he would not decrease the rate by more than Rs. 100. With rates of other properties in the area being more than Rs. 4000, this property was attractive; but was however slightly above the budget. We left the builder’s office with a mixed feeling and stopped at a pan shop for a smoke. The panwalla who saw us walking out of the builder’s office, asked if we were interested in buying a flat in that building. I told him that we were interested, but the flat was slightly above the budget. He asked us to wait and made a phone call. A man appeared in 5 minutes and introduced himself as an estate agent. He told us that he could get us a flat at Rs. 3500 per square feet. I was surprised as to how this man could offer a flat at a price lower than the builder himself. My friend immediately showed interest and he took us to another agent at Malad. He had all the plans and other details of the building. He told us that only a few flats were available and we were able to agree on one. Then he told us that a token amount has to be given on the same day at Andheri. I was trying to figure out who these people were and making deals with us about a property, with whose builder, we had discussions just a while ago. The agent told us that they were working for an investor, whose office was at Andheri. He explained that the builder had already sold some flats to the investor before the building was built to raise finances and this investor wanted to sell his flats earlier because he needed money soon. The rock-solid category of a builder suddenly shattered in my head – now there were many people making up the category of the builder.

Later on when we had already finalised the deal, I came to know about the details of land. It was a land provided by the Housing Authority to a cooperative housing society. Our builder was the secretary of this cooperative society. But there was one problem, my friend wasn’t a member of this society and names of all members had to be registered with the Housing Authority for acquiring the land. We discussed this problem with the builder cum secretary – he said he would manage. Several legal papers had to be signed and two weeks later, my friend got an acknowledgment from the Housing Authority confirming his membership with the Society. Because, this was not a project with routine systems of title registration and stamp-duty procedures (as all society members were building their own houses and there was not supposed to be any buying or selling), the banks were not confident of providing a loan. We spoke to the builder about this and he asked us to approach a cooperative bank, whose manager was known to him. We went there and came to know that a number of people had got a loan from this bank for the same property. Even my friend got the loan. Two more connections became clear – between the builder and the people in the Housing Authority; and between the builder and the bank manager (or the bank). It was clear that the builder wouldn’t have been able to operate without support from these people. The category of the builder seemed to be actually made up of numerous people with varied associations.

While, the existing actor groups seem to require interrogation, several new actors seem to emerge in the real estate industry – most prominent amongst them are the actors who build the speculative environment – not the speculators, but the agents who nourish the speculation. This is most clear in the case of a mega township in Malad. This place formed the outskirts of the city until the mid 80s and was characterised by large agricultural lands with a creek along the western side. In the City Development Plan, the land along the creek was reserved for a garbage dump yard. In 1999, the garbage dumping activity was stopped. Later that year, the whole edge of the creek was cordoned off and a hoarding came up along the fence stating ‘Mind Space’. The ambiguity of the advertisement spurred a series of speculations. No one knew what Mind Space was. Slowly clues about it started appearing on some more hoardings – it was a township being developed by one of the biggest developers in the country. Soon, outside the cordoned-off space, agricultural fields were hurriedly bought by small developers who mobilised money from large networks of investors and real estate agents. The price of land stared hitting the roof. For the farming communities it was an opportunity to strike gold. Most of the agricultural lands started getting developed as housing colonies. A year later, one of the fenced sections along an arterial road was opened – the smelly edge of the garbage dumping ground was now a brand new mall with three super stores, several small boutiques and a five-theatre multiplex. Just behind the mall was also a call centre.

In retrospect the strategy in Mind Space has become evident. The first sets of advertisements were put up to bring about anxiety amongst potential investors. Once this was done the real estate consultants took over. Rumours were floated in high society parties about large amounts of real estate already being sold. The speculative environment created a large demand for real estate in the project – most of the real estate was either sold or leased even before the foundation was laid. The plans were drawn and executed over several years – the developers had started assembling powers of attorney for the land holdings from private owners since the development plan was made. In the development plan two arterial roads were proposed that would connect the place with the rest of the city and the airport. The Mind Space illustrates a complete inversion of the notion that it is the poor, who use tactical means to inhabit space in the city. Moreover, the planning of a speculative environment is evident, where one of the most prominent actors of today seems to operate – the aggressive real estate consultants. In the name of feasibility studies, the work of the new real estate consultants is to create a speculative environment.

3. Real Estate impacts Cultural Landscapes

Here, I contend that the emerging conditions of real-estate is bringing about several kinds of changes in the cultural landscapes of the society much beyond simplistic generalisations of ‘real-estate prices going higher’, etc.

In case of Mind Space, as soon as the first mall came up, real estate values all around the area spiralled. People responded to this with confusion – some sold their houses and retired to another quieter town after sending their children to study abroad, some started bargaining with developers to raise the value of their properties and others took loans to buy property in other areas with lower prices with an expectation that there will be an appreciation later. There are several families in the area that own more than one house. The space around the Mind Space complex has also changed: predominantly developed as residential complexes, these places also have absurd combinations of enterprises – interior designers combined with stock-brokering agents, travel agent with courier and security services, money transferring agencies with an employment bureau or a contract-labour agency, etc. There are also street level informal enterprises, providing cheap food for people who cannot afford food in the malls. In many ways they become a public private-space – hoards of people visit the malls everyday and the mall promises ‘a million experiences’. These have become performative sites where people live their aspirations by just floating around in these spaces. These become sites of borrowed pleasures for those who cannot buy the goodies they sell. These performative acts sometimes help to muddle class structures so firmly etched out by abilities of people to have and not.

There are also large numbers of cases, where real estate has produced intense contestations. In the case of a housing colony near a mill, a developer got interested and started the process of acquiring the land with the government. However, local consent was required as per the law and the developer started negotiating with the existing community. He proposed to redevelop the area and give them new housing according to the rehabilitation regulations of the state. The members of the community had varied opinions on this and so the developer started bribing key members. The developer started threatening those resisting his initiatives through muscle power. Meanwhile, the developer also bribed government officials and got a redevelopment plan approved. This group of community members resisting the developer approached an NGO who had support from a local politician. The NGO started having meetings in the locality. Members of the NGO also got threatening calls from the developer’s men and court cases of instigating people against the developer’s legal process were filed at the local police station.  So far it was clearly an instance of a land grab. Soon, the NGO approached the judicial court and sued the Municipality for approving the redevelopment plan of the developer without the consent of the people. The court stayed the developer from proceeding with the redevelopment. Time passed and the developer got impatient as he wasn’t able to do much. One day in desperation he sent some tantriks (priest performing occult rituals) to do black magic on the people in an attempt to win them over on his side. These tantriks were beaten up and driven away by the community. Meanwhile the community members also asked another NGO to help them redevelop their property. The community wanted to retain the profits of the redevelopment with themselves instead of passing them over to the developer. The NGO made plans and worked out an optimum project where the community would get reasonable housing as well as a sizeable corpus for maintaining their houses. Armed with the knowledge of the development math, the community members now approached several developers and are in the process of finalising the project with the one who gives them the best deal. The whole land-grab / land-appropriation issue seems to have turned on its head with the developer losing a large amount of money and the poor community in the process making enormous profits on account of high land prices.

There are cases, where community groups that were traditionally considered to keep future community interests seem to have wobbled under the high real-estate prices. In one case, a local community decided to develop their property and a group of architects who made redevelopment plans for them. The architects convinced them that they did not need to use up all their rights to make the project feasible and substantially profitable. In doing so, they would get an ideal structure of open spaces. The architects worked out the selling price of real estate for which the community had to find a buyer. This was a perfect example of communities coming together, resisting developers and developing their own properties. However, soon a developer approached the community and offered three times the selling price. The condition was that all the rights would have to be used up. Looking at the possibilities of triple profits, the community immediately entered into an agreement with the developer.

The above illustrations aim at examining the theoretical categories, actors involved, their strategies involved and impacts of the developments in the real estate (market). While, these illustrations do not provide an exhaustive / comprehensive understanding of the scenario, they nevertheless provide important perspectives on the cultural dimensions of real estate. The important thing to note here is that the method used for analysis depends on field-study based thick micro narratives – this is because the real estate conditions are just emerging and remain opaque as information about them are not always empirically decipherable through conventional methods. With absurdities like slum tenements costing more than Rs 1 crore, buildings in perfectly good conditions getting redeveloped, NGOs turning builders, government providing housing only for rehabilitating people displaced by a road project, communities becoming immensely greedy, etc. this seems to be an era of the new real estate characterised by aspects that cannot be understood by singular frameworks and would perhaps require multiple innovative methodological frameworks.  Hopefully such new explorations would allow fresh perspectives on issues like housing and employment creation.