The Indian equivalent of Swiss Banks

Gold in India, after import restrictions were dropped post liberalization in 1991, has started to witness price fluctuation in sync with world prices. No so for real estate. Real estate prices in India appear to elude price corrections. Except for  Mumbai and Delhi which saw a price correction right after the 2008 financial crisis, land prices in the rest of the country seem to be immune to any movement in the economy. The fact that 1 billion people wish to own a piece of land or apartment complex that they can call their own can only explain a small part of this phenomenon. The seemingly infinite demand theory falls flat when one reads about the half a million apartments that remain unsold in the top 10 cities in the country. By some reports, the number is closer to two million.

Clearly, there is tremendous holding power amongst the builders and developers who can afford to sit on unsold inventory without budging on prices. This can only happen when the investors do not expect an ROI on their investment. The truth might be a more extreme case of this ROI-no-object situation.

I suspect, as do you I am sure, that corrupt elements consider real estate a safe haven for parking. Where things get interesting is that unlike most investors, the corrupt are not too worried about a return on their investment. The distinction between investing and parking is very clear in their minds. I suspect that they would like an avenue where they would be able to access a good chunk of their ill-gotten booty at short call.

Imagine now a scenario where Extremely High Net Worth individuals are willing to park their money for zero returns. In fact, they might be happy with paying a small fee for the service of parking their money and delivering it back to them on need, say when elections are announced. This might go some way to explaining the seemingly limitless financial patience of those who develop or invest in real estate.

The new Finance Minister has shown that he understands this clearly, for he has mentioned that going after real estate and private educational institutions is likely to unearth a lot of this ill-gotten booty.

What's taking him so long?