Goa’s real estate boom
For 20 years, Goa’s property prices only rose. The only question has been how fast rates will tick higher. Sums demanded and received per square metre more than quadrupled in two decades in a market fed by rapacious demand from the newly moneyed classes of India. Everything on the market went incredibly fast, from tiny flats in giant complexes to every size of village houses, to all categories of land. This has been a lawless gold rush, exactly like the broadest excesses of illegal mining that used to rule in India’s smallest state. Every possible norm has been routinely flouted. The entire regulatory system has become riddled with corruption. A pernicious builder-politician nexus now reigns.
Exactly the same happened everywhere else in India, so it would be unrealistic to expect vulnerable little Goa to fight off powerful forces that have already subsumed the mega cities of the subcontinent such as Delhi, Mumbai, Bengaluru, Chennai and Hyderabad. This tiny state’s real estate demand has been buoyed by ceaseless growth in the rest of the country. New-build flats and condominiums in the state were grabbed en-masse by metropolitan Indians seeking second or third homes, while heritage houses and other larger (and much more highly priced) properties found ready buyers from the rapidly burgeoning wealthiest “one per cent” of the country.
Just as the Goa property boom was always directly correlated to what happened in the rest of India, there are now glaring signs that decline is on the way. Home sales around the country dropped steeply in 2017 to the lowest level recorded in almost a decade, nearly 40% lower than 2011. According to property consultants Knight Frank India, consumer confidence in real estate has plummeted. New home launches are dramatically reduced in all major marketplaces, down by over three-quarters. Sales have declined for seven years in a row. Average home prices actually slipped lower, 7% in Pune, and 5% in Mumbai.
For at least a decade, many red flags were raised about India’s property bubble. It has always been apparent it is the beneficiary of much of the country’s unaccounted money. Across many markets, including Goa, there has been a mystifying disconnect between rents and property values, where the former remained stagnant even as buyers kept paying more to own. This goes against every economic guideline, and is the clearest possible indicator that real estate became a place to park undeclared cash. Add up environmental devastation and the devastating social damage suffered by communities subjected to unwanted real estate construction, and the real costs of this artificial bubble’s alleged “development” are staggeringly high.