You can Google this one. Just the way I did. Keywords ‘World Population’.
The world population as of October 2016 is estimated at 7.4 billion. And the UN estimates it will further increase to 11.2 billion by the year 2100.
This one is on Google as well.
Total Earth’s land mass is 36.8 billion acres. So, if we were to do the numbers, each living human being could get approximately 5 acres of land individually. While, most would request their land to be at a Hawaiian beach and not Antarctica, there’s a trigger in these numbers.
To counter the hospitable v/s inhospitable land debate brewing in your mind, allow me to submit that as yet we haven’t even considered vertical living. We are only talking 5 acres horizontal land share per living soul. But does it occur to you that a whole lot of people around the world believed that we are running out of land in a rapidly growing economy, and the prices of houses and apartments should increase manifold!!
And thus, an investment value was stamped on to residential property and created a real estate bubble around the world whose collapse has fuelled the current economic crises.
Yes, all land is not equal. Economic activity concentrates in cities. Clustering of activities reduces time, logistics and costs. But then, all major countries have abundant land often tied up in regulatory barriers of conversion of land use or lack of economic incentives. This land is relatively undeveloped and yet in close proximity to some of the world’s largest economic and job centers.
Rapid expansion of Delhi NCR engulfing as far as 40 kms outside of UT border is a step in the same direction. If land was scarce, Bhiwadi, Rohtak, Ghaziabad, Gurgaon, South Delhi, Noida should have all be priced similar.
Incidentally for the developer, realtor, home lending industry, there always exist the investors or the speculators who work on the premise that habitable land is in low supply and the increasing pay checks & population will only fuel more demand and the price for real estate can only go north.
Going back to the Googled numbers. If the population were to go up by even 50% by the year 2100, demand can only go up by the same number assuming that every single person earns and every single person takes charge of a home, because they are not making any more of the land! Is that true?
What if the city allows an FSI of 1:6 instead of 1:1? Area for living will go up by 6 times.
Will demand still surpass supply? Wow!
This brings us to the next statement – land is not scarce, but it is the shaky social infrastructure that is restricting. The one keyword that real estate swears by is ‘location’. If the FSI of ‘sought-after’ location were to be revised, it would send the prices crashing for the people who hold land banks or properties there. The same would not find favour with some vested interests. And the word location continues to discount the fact that life away from the city center is more at peace, more affordable and allows for wider landscapes to enjoy life in.
Unless you are at the Hawaiian Beach part of the article still, there is plenty land all around to urbanize, and at a much better price point with latest in offering. Plenty of developers are moving that ways. Plenty of people are identifying this reality. The closer you remain to reality, the easier it is to fund your realty aspirations.
First published in ET Realty on November 21, 2016
