Times have changed significantly in those 36 years that you have lived in the US most notably in the past decade or so. We no longer live in an isolated world but live in a wired and flat world where you have unprecedented level of access to information around the globe. Indians are traveling around the world like never before and are getting exposed to global standards. Similarly, lots of foreigners are coiming to India to work as a stint in India or China on their CVs has become a much sought-after attribute. Many of us are being invited for dinner by foreigners when we travel abraod and we are inviting foreiners living in india for dinner to our homes as well. Most people living in New Gurgaon would have travelled to many countries many times and many of us have lived abroad for a few years.

In such a scenario, there are many reasons why there can not be huge divergence in our view of luxury vis-a-vis the first world though some differences across countries are understandable. In particular, in places like New Gurgaon where most people have ample global exposure and which is a home to a large number of NRIs and expats.

1. Media hype is purely embarrassing: I did not know if you witnessed the media hype over a silver medal that we won in the last Olympic or the 3 medals that we have won in this Olympic. If you think about the foreigners watching this hype or reading our newspapers, you feel like hiding somewhere as we are making our nation a laughing stock of others - they must be thinking - people in the second most populous country in the world are jumping around and feeling proud of their achievements by winning 1 Gold and 2 Bronze medals while the most populous nation has accumulated 46 Gold medals so far. Similarly, when media or real estate tycoons call something a luxury, people do not think that the difference in their perception and reality would be so stark until they see it. Another example of media hype - People who come to Bangalore for the first time, can not believe their eyes and sometimes ask - Is this what you call "Silicon Valley" of India ?

2. It creates perception about our notion of quality and the quality of our products and services:
   

3. Thanks to the Socialist era, price of "luxury" is high in India: Though times have changed, due to the hangover of the socialist era, we still classify certain things as luxury and impose heavy taxes which limits demand and impedes economic growth. Not long ago, Color TVs were classified as luxury products and a color TV used to cost twice as much as in the US. Even now, prices of color TVs are higher than most of the developed world thanks to high levels of taxes (and, of course, lower volumes)
   
4. Our blinkered visio of luxury creates scarcity and leads to high prices impacting our industries (such as tourism):
   

I understand that India has remained stagnant for most of those 36 years but now things are changing and I sincerely hope that our media people and others also get connected to the world soon and understand the implications of what they say or write.

Belvedre Park news coverage for 2-3 days in Hindustan Times might have shocked apartment owners and prospective buyers but was it something totally unexpected? It reminded me about the cracks that got developed in another DLF property Hamilton Court during an earthquake a couple of years back. It would be interesting to examine the roles of various players in building what Hindustan Times describes as "an Urban mess called Gurgaon".

First the journalists who repeatedly describe Gurgaon apartments as "luxury" or "super luxury" condominiums. But are they really so? Or are they like dwelling units of economically weaker sections of the society in a developed country? Is having a tiny swimming pool makes a complex "luxury" complex? Or having something as basic as uninterrupted power and water a luxury? Most of the existing DLF apartments have very little open space. Many of them have a cramped structure where if you put a king size bed in a bedroom or a large sofa in the living room, you would not have any space to move around. I guess even in this globalization era, for media, the luxury is a relative term having a reference to the living conditions in the third world countries.

Then, the "visionary" builders who claim to be building India. Have you seen the "world class" traffic chaos at the "world class" Cyber City? When it rained recently, it was also literally raining in the basement of this world class building built by the largest builder in the world. The builders who were selling "luxury" apartments at Rs.2000/sft  - Rs 2500/sft which included good profit margins, when faced with a situation of  increasing demand from genuine home buyers as well as investors, kept increasing selling price to take it to absurd levels. Worse, they tried to outbid each other in acquiring new land and raised the land prices to unheard of levels hugely raising the expectations of the farmers. Now, in a recessionary real estate market and rising inflation, this is something which is going to hurt them badly. Builders also invented "innovative" scams such as pre-launches through which the apartments were "sold" to investors thus creating an artificial supply crunch to push up the prices. Builders also built a cartel to ensure that they enjoy high profit margins, thanks to all the investors, and the end user got a raw deal.

NRIs, perhaps reading the articles describing the "global takeover" by Indians in Indian newspapers like Economic Times (yes, a handful people of Indian origin out of the crème de la creme of the country immigrating to the west for decades became CEOs of global organizations and some Indian companies made acquisitions abroad). were convinced that India will be a superpower soon and started investing in Indian real estate like crazy often without verifying the credentials of the builder or the prevalent civic infrastructure in Gurgaon. Some of them compared the prices in India with those in some of the developed countries and found the real estate here "cheap". Did they forget that India's per capita GDP of $1000 is around 130th in the world? Even countries like Indonesia have a per capita GDP that is twice as much as India's. Did they forget that they are comparing prices of real estate amidst a third world infrastructure with those in the first world? Since they saw good appreciation in their properties thanks to lot of investors, it did not matter.

As the home sales drove up as a result of falling interest rates (you could get a loan for 7.5% at one time), low inflation, rising income levels and general optimism all around, a number of investors from all over came to join the party. A number of brokers made a killing and they themselves became investors. NRIs also realized the "potential" of Indian real estate and started investing in the real estate. The prices skyrocketed and it appeared that the homes were being built to be traded like the scrips on the stock market and not for people to live. Valuations, Purchasing power of the country, Infrastructure, economic fundamentals - none of it mattered. Investors believed that this is a party that would never end and they will be able to easily find a bigger fo--(err, a more savvy investor with deep pockets, often an NRI) to sell their property at a higher price.

What did the government do during the great boom? Well, it supported the boom by doing nothing. It "forgot" to build sewer lines and to provide power, water etc. You see all the big builders have 100% power backup in their projects and the water table in Gurgaon is still a number of years from completely depleting - so why bother?. Unitech Uniworld Garden has been running only on DG sets for more than a year and many buildings in DLF Cyber City are also running completely on DG sets - so others can also do it. What if the cost is high  - people in super luxury apartments can afford it and the high cost of operations for businesses does not matter as DLF has a lock-in for a few years.  It will now look for new unsuspecting buyers. What if businesses put brakes on growth in Gurgaon and instead decide to grow in Chennai, Pune or Kolkata - the babus would have built enough bank balance by that time conniving with those who prosper because of the poor infrastructure.

Now that the interest rates have steadily gone up in past several months, the inflation has gone up several times, stock market has lost 30% of value from its peak  (and hence the investor wealth), genuine home buyers have decided to say "No" to absurd price levels as either they are not affordable or they do not see value or both. A number of investors have put their properties on block and are not finding buyers, though, quite a few of them still remain optimistic. Builders have launched new properties at much lower rates though at farther places and have vowed not to go aggressively after building their land banks. Would all this lead to a wake up call for all the players involved and the consumer would see better infrastructure, better quality of buildings and better value for their money, only time will tell.