We Already Know Housing Economics
The basic principles of housing economics would seem obvious, if people are willing to admit the truth. We already act upon these truths, though we do not really notice this.
Economists usually agree that Indian cities should grow vertically, to allow everybody to live in spacious houses. In densely populated Indian cities, this is important to create more open spaces. When buildings are taller, we do not need much land to build residential and commercial buildings. It is easier to free up land to build parks, gardens, wider streets and sidewalks. Ordinary people, however, do not find this convincing. Many architects and urban planners do not find this very convincing either. Is this because this is a complex position that is beyond laymen? I think not.
Households find this obvious. This is why people build two-or three-storey houses that allow them to have more space. As individuals, we know that land is scarce, and that we should make the best of what we have. Real estate developers know this, too.
But, as policy analysts, many believe there is something sinister about skyscrapers. They assume that skyscrapers make people less friendly and sociable.
As individuals, they know that apartments are cheaper than houses, in metropolises. But, as intellectuals, they assume that the rich live in high-rises. They know that their apartments will be more expensive if developers comply with regulations that place an upper limit on the size of apartments at 40 square meter. This is why they used to buy adjoining 40 square meter apartments in Mumbai, and remove the wall to combine them. But as voters, they accuse developers of profiteering. As private citizens, they find it obvious that it is cheaper to live in slums or illegal colonies that violate zoning regulations and master plans. They know that building codes and unreasonable regulations are costly to comply with. However, as voters, they think cities need more top-down, centralised planning.
This is only the tip of the iceberg. Floor area restrictions and weak property titles prevent the redevelopment of slums. When slum redevelopment schemes are proposed, the real estate developers, on the other hand, are allowed to build tall luxury towers at a higher floor area ratio (FAR is the ratio of the size of the floor to the area of the plot.) This is because, deep inside, they know that it is not possible to give free flats to slum dwellers if they are not allowed to build taller luxury towers. Similarly, when authorities redevelop crumbling rent-controlled buildings in Mumbai, they allow higher floor area ratios. Deep down, they know that it is impossible to profitably redevelop these buildings, complying with the existing floor area restrictions. Landlords, however, are not allowed this luxury.
Cities are unpopular in India. But, people would not have moved to cities to live on the pavement, sidewalk shelters or slums if they did not know that cities offer a much better life than the quaint villages they left behind. This means that even the people who live in slums and pavements know that cities have so much to offer. Curiously enough, in India, the obsession with technology-driven smart cities coexist with a romantic view of rural living.
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