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Sunday, May 11, 2008

IT professionals in Kerala, Land mafia's primary prey. - A shocking report


Strange as it may seem, IT professionals are building up the "land mafia" in Kerala. What's more, they are converting their tax-payed white money into black money - and they don't even seem to know it.Unlike most states, Keralites don't invest in businesses is Kerala.

While the land is flush with NRI money, most of it is directed into palatial houses and real estate. Lack of investments in business has meant that a good number of youth has gone into lucrative but illegal activities, promoted by the so-called mafias - land mafia, spirit mafia, quarry mafia, sand-ming mafia etc. (In the strict sense of the word, none of this has achieved the level of "mafia", which is actually a parallel government. At least, not yet!)


Of these, the one that has raised eyebrows of the central investigating agencies (DRI, ED, CBI, IB) is the sudden growth of "land-mafia". Kerala is a small state with a high density of population, and naturally, land prices are on the higher side. Inward remittances from the Gulf already existed, but the growth in IT sector has meant that a lot more young people have a high disposable income in their hands. Unlike in the past when investment was limited to bank deposits or land, many more investment avenues exist now, like a well-controlled equity market and mutual funds (India has one of the most transparent mutual fund industry in the world). However, either due to ignorance or risk-awareness, those in IT still invest a good deal of their money in real estate. Most financial planners agree that the value of one's real estate investment should not be more than 25% of one's entire asset, but for IT professionals in Kerala, it is much higher, sometimes more than 100% (which means they are in debt due to loans). Buying flats to give out on rent is even worse - as any qualified advisor will tell you: the yield from them is less than bank FDs, even after including tax rebates. The current trend is based more on emotion and "also-ran", rather than reason and facts. Banks have no problems in disbursing such loans to IT professionals though, due to their high income earning capacity.

Many middlemen have used these sunshine days to buy huge tracts of land from ordinary folks who reside in and around urban areas. What is alarming, however, is the arrival of "container money". Last year, fake Indian currencies worth crores (thought to be printed at government security presses of neighbouring countries) have been seized from ships and containers at Kochi. DRI (Directorate of Revenue Intelligence) officials believe what has been caught is only the tip of the iceberg. Larger amounts have already passed into our economy. The only area where such huge amounts of money could change hands is the real estate sector, since other areas are now pretty well regulated by the Central Government. Since only 20-30% of the actual sale value is shown in the land records, and the rest changes hands as solid cash, a good amount of it is thought to be fake currency..

One significant point is the history of the real estate developers. Only a very few have been around for years. Most others have arrived, under the pretense of "Gulf" money. Coincidently, the above-mentioned containers too have arrived from the Persian Gulf. There is probably only one developer, Sobha Developers, who release their audited figures to the public. Others are private limited companies and apparently find no reason to release their figures, even after all the charges against the real estate developers. Building rules are nonchalantly violated by many newly constructed flats. For example, the building codes specify that there should be enough space around the apartment so that a standard fire engine can reach anywhere around the building. Look around in the city. At some flats, even a Maruti Zen would find that difficult!

IT professionals, by scorning other investment avenues, seems to be promoting the cause of the fraudulent real estate industry. Their readiness to buy land or flats at abysmally high rates enable the unscrupulous builders and their agents continue to thrive. (Amazingly, a flat at Kazhakootam anywhere near Technopark in Trivandrum costs as much as one at Hyderabad HiTech City? The internal finish of the ones at Trivandrum, however, are hopelessly pedestrian). The IT professionals buy the land or flat in the hope that land prices fetch highest returns. True, land prices do escalate faster than most other avenues (except probably stocks), but when they try to sell the land, they will be surprised to find that no one would be willing to buy it in "white". In essence, if they do sell, they have actually converted their white money (when they had bought the land) into unaccountable black money. Bonus: Risk of the gotten black money being counterfeit is extra!

What a pity will it be when the IT professionals, who has sacrificed a lot for the economic spurt of this state, are themselves responsible for destabilising it. Whether they would continue to invest in land and flats or invest in much more productive and legitimate avenues, would determine whether this land would fall to the mafia -this time, in all sense of the word.

13 comments:

naveen said...

IT employees in technopark as well as infopark is investing heavily in land and flats, in a very unreasonable rates. after reading this only i came to know how dangerous it is. thanks for the article.

Anonymous said...

I think this entire technocity is a myth. Look at technopark's own site which indicates the land formally requested by IT companies- http://www.technopark.org/landr.htm
Only 13 acres have been demanded from the upcoming Technocity? (Phase III and SEZ are part of existing Technopark, not Technocity) Why is it proposed to acquire hundreds of acres for Technocity??? Things look too fishy!

vijayakumar said...

Land and flat mafias are ruling the city, please keep yourself away from them.

sony mathew said...

I like the thing about Fire Engine. i think you specified the heera twins in pattom jn. it seems the builders are violating all the rules and our officials are blindly approving them because they are getting bundles of money( black or white, who cares..)

niranjan said...

so what's new? every it guy know this, but still continue helping the mafia. selfish it guys

asha alex said...

but how can we put an end to this?

riyas said...

donot buy the land or flats for this high prices. it will come down if we stop purchasing it. the brokers also playing a vital role in this mafia.

i heard it from one of the brokers, that he will ask for 200 - 300% of rates than the normal rate, and he only gives one third of that to the real owner, and rest is for him. think how much money they are making by fooling us... it is hard earned money rite? you are spending your time and health to earn money and thats simply giving to the brokers and mafia persons without a reason. so please stop buying the property for sometime. that only save us.

sethu said...

i think land in trissur cats more than in tvm

sharon said...

now a days the black money is heavily invested in the real estate. as the author pointed out, by purchasing the land or properties, we are also becoming a part of that chain. they are getting money with out any extra effort. but for us it is hard earned money by borrowed your youth, energy and life. so think again before purchasing anything from these mafias

sam kurian said...

its a very interesting and same time a shocking report. techies need to think loud.

Anonymous said...

I think this entire technocity is a myth. Look at technopark's own site which indicates the land formally requested by IT companies- "http://www.technopark.org/landr.htm
Only 13 acres have been demanded from the upcoming Technocity? (Phase III and SEZ are part of existing Technopark, not Technocity) Why is it proposed to acquire hundreds of acres for Technocity??? Things look too fishy!


Mythu(Nik), my friend, dont worry. "Technocity is a myth. It will not happen, your smartcity is a an excellent project". OK
Are you happy now?

Now come to facts.
How many comapanies has asked for land in your infopark and smartcity?

You dont need to get worried about the acquisition of land of hundred of acres. You dont need to pay any sum to acquire that land. Gok along with banks will pay for land.
And they had almost finished it. The entire land will be in Goks hand with in two or three months.

Next for developing the IT SEZs three, Mythu, you dont need to spend even a single ruppee for that. The developers who participated in the "Developers Conclave" will do that.

Finally, Technocity is three to four times bigger than your Smartcity.

Built up Space for IT

Smartcity - 6.2 million sqft(62 lakh sqft)
Technocity- 20 million sqft(2 crore sqft)


Proposed Investment

Smartcity - 1500 crore
Technocity - 8000 crore


This is not my statement. It is said by the man who have the authority to say that , none other than the IT secretary.

If you still have doubt, see this link
http://www.newindpress.com/NewsItems.asp?ID=IEX20080521010750&Page=X&Title=Kochi&Topic=0&

Mythu, are you happy now?

Anonymous said...

Still anybody believes that Technocity is a Myth???? If so he is living in his dreams. Coame out of drems and face the reality.

See the news:

http://www.newindpress.com/NewsItems.asp?ID=IEO20080701235607&Page=O&Title=Thiruvananthapuram&Topic=0

9 IT majors in the race for developing Technocity

Larsen & Toubro, Raheja and Suzlon are among the nine major groups whohave come forward for developing the Technocity, the-state-of-the-art IT townshipbeing set up by the State Government on 500 acres in the state capital.

Emaar MGF, Maytas, Sun Forrester, SREI, Brigade and Ramki are the other major groups that have responded to the request-for-qualification’ (RfQ) invited by the Kerala State IT Infrastructure Limited (KSITI) for developing IT and IT-Enabled Service projects at the Technocity as well as the third-phase of the Technopark. The RfQ was released on May 28. The last date for submitting applications was June 30.

A committee headed by Chief Secretary P.J.Thomas will scrutinise the applications. The committee will have secretaries of IT, Industry, Finance and Law Departments and chief executive officers of the Technopark and the Infopark as its members. Those who do not satisfy the conditions prescribed in the tender notice would be rejected. The Cabinet should approve the final list of developers for the Technocity.

IT Secretary Ajay Kumar said that the land acquisition process for the Technocity at Pallipuram, around five km away from the Technopark, was progressing and the construction works were expected to begin within six months. The Technocity would have all the facilities of a town, including a school and a hospital, on its premises.

While 70 percent of the space would be utilised for IT-related activities, the remaining area would be utilised for other supporting infrastructure. The projects would be developed on a Public-Private Partnership (PPP)-basis with the KSITI holding 26 percent equity.

The developers will have to form a `special purpose vehicle’ (SPV) for executing the project. The SPV will be responsible for designing, engineering, financing, procurement, construction, marketing, operation and maintenance of the project.

The project will be carried out in three different ranges - IT/ITES project for parcel size up to 50 acres; IT/ITES Project for parcel size greater than 50 and up to 100 acres; IT/ITES Project for parcel size greater than 100 acres.

Raj Nair said...

Very good article.. really an eye opener. The worst part is that our hard earned white money is converted to black or even fake money!!!
Better keep away from this. If u have enough disposable money, think big; Start a business of your own or atleast invest in some reputed company shares.