The virtual domination of the institutional builders

Discussion in 'The Great Indoors' started by durban01, Feb 8, 2011.

  1. On the supply side, the real estate market can be divided into two categories of the private and household sector, and the institutional sector. In Cochin Apartments and luxury villas are now mostly developed and managed by the institutional sector, which has the ability to generate significant amounts of money for investing into such mega projects.

    The institutional sector includes the rental housing supplied by public and private sector employers to their employees, as well as that supplied by government or non-government organizations to the general public. The Central and state governments, local bodies, major public sector institutions like the Indian Institute of Technology (IIT) and Indian Institute of Management (IIM), public enterprises, banks and insurance companies provide housing for their employees in the place of employment.

    Large private companies also provide housing for their employees in owned or leased houses. In all these cases, the employer charges the employee a ‘rent' or ‘license fee' equivalent to some proportion of his income, which, in most cases, is around 10 percent of the salary. The landlord is responsible for the maintenance of the quarters, and the employees have to pay the utility charges. In the absence of a provision of housing, a rent allowance is paid to the employee as part of the emoluments, which may vary from 10 to 35 percent of the income, and which is expected to meet the cost of hiring a house in the private sector.

    The central, state and local governments provide housing to their employees as a welfare measure. The government of India and the respective state governments have set a target for satisfying the staff housing demand for 75 percent of its employees as against the present overall satisfaction level of 39 percent. A flat rate of monthly license fee is recovered based on the size of the house. In the case of all staff housing, the rate or return on investment does not dictate the decision to provide rental housing, but the governing factor is rather land and the available finances. The rents are not only related to the market rates, but often do not even cover the maintenance costs.

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