In the early 1990s, Gurgaon was a small city in northern India that blended with the nearby farm fields and villages. But much has changed since then, as Gurgaon and its environs have been transformed into a financial hub with modern office buildings, condominiums, and luxury malls towering over the former agricultural landscape.
Gurgaon has become one of the premier success stories in the developing nation. But Llerena Searle, an assistant professor of anthropology, says there’s more–or less–than meets the eye.
Searle spent 16 months in India interviewing more than a hundred investors, bankers, developers, contractors, architects, marketers, planners, consultants, and others. Her findings, presented in a new book, Landscapes of Accumulation, detail the factors and the relationships behind the sudden, even spectacular, growth of India’s cities, while providing insights into how urban areas are developed around the world.
“While Gurgaon’s new buildings look like signs that Indian society has changed and become more global, says Searle, “they are actually speculative gambles, based on stories that predict those social changes.”
A Sikh man who invests in the capital region repeated a story that Searle heard often about growing demand for housing and increasing prosperity rates, driven primarily by the IT industry. But Searle’s research revealed that this is a story that real estate developers tell in order to attract investors.
In 2008, only one-half of one percent of India’s working population actually worked in IT. Ninety-five per cent of the population earned less than US$4,400 per year – far less than the income needed to buy the luxury apartments developers were building.
As Searle explains, “Speculation isn’t just the madness of crowds; it’s a widespread business practice.”
The practice, as described in the book, has led to fancy golf courses, high end malls, and ornate corporate headquarters that, instead of serving the public interests, cater to a shrinking minority of the population.
This practice became more commonplace after 2005 when foreign companies were given the right to invest in real estate, as long as they partnered with local developers. For India, this was an opening to have outside money finance urban development.
Of course, a big step in attracting that foreign money was convincing international corporations that India—with a population exceeding one billion—was, indeed, the next big thing.
“The media and the real estate industry both hype a reality that only a fraction of the population could possibly experience,” says Searle. “Unfortunately, the end result is construction that exacerbates the dispossession of the poor.”
Among those not dispossessed, according to Searle, are the government officials who insert themselves into the development process by purchasing land that they know corporations will want for construction projects. The end result is a complex system of speculative financing and development involving government officials, local developers, and international investors.
While foreign companies have been eager to profit from construction projects in India, they did not see eye-to-eye with the Indian developers on critical issues, such as construction practices and accounting methods. That has led to uneasy partnerships and tense negotiations. Examining those partnerships in detail, Searle shows that foreign investment is not just a matter of reducing government regulation. Rather, it relies on attempts to control and standardize building practices, as well as on stories about growth and prosperity.
