Best insurance for wealth.

In Greater Noida, on the outskirts of Delhi, 52% of all apartments are lying vacant as are 33.3% of all properties in Bhiwadi, Rajasthan and 27.3% in Navi Mumbai. In absolute numbers 109,519 properties in Navi Mumbai, 71,137 in Gurgaon 52,226 in north Goa, 45,026 in Jaipur and 31,465 in Greater Noida are lying vacant. These are the highest numbers, but every town and city in India has thousands of properties lying empty. This despite the fact that any property costing more than Rs 3 million will attract wealth tax @ 1%, unless it is rented out for more than 300 days in a year. Why buy property if you are not going to use it? Because it is the best hedge against inflation. A 1200 sq foot flat in south Delhi, bought in 1984 for Rs 350,000, from the Delhi Development Authority now costs over Rs 30 million, a compounded annual return of around 14%. Also real estate is now the only avenue for investing vast amounts of black money generated from the infinite number of scams committed by our politicians and civil servants. But surely it would be best to rent out any extra property rather than letting lie idle, when it is not generating any income, and then paying wealth tax on it. People are afraid to rent out any property for fear of losing it because the rent laws are so skewed against owners and our courts are pleased to drag out cases for decades, by which time the original owner may have died of starvation. So many empty properties could indicate an oversupply which should result in a fall in the prices of real estate. In fact, it is just the opposite. In Greater Noida, where 52% of properties are lying vacant, the price of real estate has increased by 27.6% in the last 2 years. The same in Gurgaon where 20.3% of properties are lying empty. By buying properties as investment and then leaving them idle creates a shortage, pushing up prices, which attracts more buyers looking for high returns on their money. The astronomical prices mean that ordinary people are priced out of the market and have to live in rented accommodation. But here too, with so many apartments lying locked up, an artificial shortage is created, resulting in high rents. The government wants to build affordable housing for everyone but with land prices so high how will it be possible? One method would be to build upwards, which means many more apartments on the same plot of land. But will people afford the maintenance costs of elevators, back up electricity generators and cleaning. Tiny flats are of no use and there will need to be huge car parks because people now aspire to greater material comforts. Eliminate black money by reducing prices of real estate drastically or reduce demand by reducing population. No easy choices.