Tossed-Out $20 Tenants Turn Millionaires in Mumbai

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Residential buildings sit at Napeansea road in Mumbai, India. Photographer: Dhiraj Singh/Bloomberg

By Pooja Thakur on June 25, 2012

 

Thousands of rent-controlled tenants in Mumbai paying $20 a month, and often less, are being turned into millionaires by developers tearing down crumbling colonial mansions to build luxury towers for the rich.

South Mumbai, including a stretch of prime land hugging the Arabian Sea, has about 500 dilapidated stone structures dating back to the early 1900s with a potential redeveloped value of about $40 billion, according to Pujit Agarwal, managing director at Orbit Corp. (ORB), a Mumbai-based developer that derives about 80 percent of its revenue from redeveloping old buildings.

“For generations, most tenants were living a hand-to-mouth existence, barely making two ends meet,” said Agarwal, whose firm is one of around 75 vying to oust Mumbai’s rent-controlled residents. “Now, with redevelopment, these tenants have become multimillionaires overnight as capital values of the properties they occupied soared.”

Home prices in Mumbai have climbed to a record 10,833 rupees ($200) per square foot, doubling in three years, according to Liases Foras Real Estate Rating & Research Pvt, a research company based in the city. Continue reading

Seinfeld: The Apartment (Rent Control)/ Seinfeld on the Luck of NYC Rent Control

 

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Seinfeld Economics: The Apartment (Rent Control)

by Linda Ghent
Jerry lives in a rent controlled building. The only time an apartment opens up is when Mrs. Hudwalker dies, because rent controls create immobility. Elaine and Jerry find out about the opening, and because Elaine happens to be first in line, she gets it for $400 per month. Subsequently, Jerry gets worried about having Elaine living so close, and tells Elaine that she can’t have the apartment–the super was offered a $5,000 bribe.

price ceiling isa government-imposed limit on the price charged for a product. If the priceceiling is set below the market equilibrium price, a shortage will occur. Thisleads to a rationing problem.
A rationing mechanismis a system for choosing who gets how many goods during a shortage. Long linesare often used to ration goods in shortage (so the good is distributed on afirst-come, first-serve basis). In addition, black markets often develop as away of rationing goods that are in shortage.
Seinfeld Economics: The Apartment (Rent Control)by Linda Ghent
Jerry lives in a rent controlled building. The only time an apartment opens up is when Mrs. Hudwalker dies, because rent controls create immobility. Elaine and Jerry find out about the opening, and because Elaine happens to be first in line, she gets it for $400 per month. Subsequently, Jerry gets worried about having Elaine living so close, and tells Elaine that she can’t have the apartment–the super was offered a $5,000 bribe.

price ceiling isa government-imposed limit on the price charged for a product. If the priceceiling is set below the market equilibrium price, a shortage will occur. Thisleads to a rationing problem.
A rationing mechanismis a system for choosing who gets how many goods during a shortage. Long linesare often used to ration goods in shortage (so the good is distributed on afirst-come, first-serve basis). In addition, black markets often develop as away of rationing goods that are in shortage.