Ricardo speaks - for the 'Un'common Mumbhai!

Ricardo speaks - for the 'Un'common Mumbhai!

The famous marginal utility theory has its origins in Ricardo’s theory of land-rent which propounds that price of a given piece of land is dependent on the returns from the least productive piece of land in cultivation. Now, carrying forward this to the Mumbai real estate scene, one can conclude that as long as there are idiots like us who are willing to buy real estate in god-forsaken areas like Bhayandar & Ambernath, the prices of house in Colaba and Bandra would continue on the upward binge. Wait a minute; what we’re really saying is that a price increase for a house in the least attractive area (the marginal land according to Ricardo) will push up the prices for the houses in the most attractive areas even higher. Now, let us look at the real reason behind people settling with an option of living in remote corners of the city, and this pertains to many of us really (not me thankfully) who choose to reside in areas as distant from the workplace (Lower Parel & South Mumbai in most instances) as Kandivali & Dahisar. The reason is this – Accessibility or the ability to commute such long distances. With the road traffic being the way it is, I don’t think it is practical for a car-owner to put his hard-earned asset to use unless one’s boss is alright with 3 working days per week. On a normal evening with normal potholes, very normal traffic jams caused by lane-changing buffoons and absolutely normal accidents on the middle of the road, a person takes close to 3 hours to travel from South Mumbai to Kandivali (and I’m not even stretching the city to its fullest extent right now). Now this ease of commuting is really for whom? It’s for the guy who is willing to travel on a train, not for the guy who owns a car.

Let me give a parallel here from a book that is a fab read – The Undercover Economist. Tim Harford mentions about the green belts being mandated in the city of London where it’s not legal to construct residential or official enterprise. The artificial scarcity for land being created by the Government through these green belts had been the real reason for the steeper property prices increases in London as compared to other cities like New-York and Sydney. The real estate prices began to increase around the distant parts of the city even more once the conveyance ease was increased through the introduction of tube trains. A guy could now live far-off from work but could still commute to work! Goes with the Mumbai story too- where the train connection to far-flung places has made sure that travel is possible, but again for those people who are “willing” to take train travel, not for the guy who has a car or desires to own one!

What about people who do not want to take train travel & can’t afford the time and cash that a cab from office to home involves? I guess I belong to that category and so would many of us. It is easy to shrug the argument off by saying that only 5% of the residents in Mumbai own a car. But the other side to it is that the wonderful size of the amazing city ensures that the 5% number works out to little over 6 lac people! Now, a very big proportion of this population segment makes Mumbai stand for what it does; it represents the lower, middle and top management cadre of the companies that have set up base here; it really comprises of people without whom Mumbai would not be the progressive, cosmopolitan & modern city that we know it as. It’s only logical that people who make money in this city would want to upgrade from train travel and buy a car sometime. Once they buy a car, they should also be in a position to drive down from work to their place. Buying a house in South Mumbai is not an option that many of us would have unless we also double up as dancers in the banned dance bars in Mumbai. So what do the companies do to retain employees in (apologies to all Mumbhais) this crowded & filthy city? Logically they have the following options

- Shift their head offices to all these suburbs, something that HLL has already done. Great that they have a vision of the world beyond soaps and toothpastes!

- Allow employees to work from home – very possible for a lot of enterprises in the service sector, especially BPOs to use technology and enable this option. But that will firstly ruin the concept of an office where people meet and have fun, I mean work and secondly make sure that people like "us" (Using “me” here would have been a correct but I assume that likeminded people visit my blog) who need a stick behind their ass to work just won’t work. So all in all, not a very practical option really.

- Expect employees to stay back in office and never let them go. True again of many service industries where a lot of “US” are employed. Jokes apart, not practical again

- Just move out of Mumbai! That seems to be the most logical thing to me. With the time taken to travel and the scarcity & price enormity of residential options near most offices, this seems like a given to me after a few years as the state Government is bound to take populist actions that will benefit the common man. And no, somebody who has the propensity to buy a car is not very common! So for all you guys who own a car – either look for accommodation close to work NOW and never quit your job or QUIT your Mumbai job now and look elsewhere!

Given the current scenario where the Worli Sea Link, Metro Trains and some Government sanity will take about a decade to arrive, unless the ball (a lot of balls really) is put in motion soon to ease the transport nightmare of the working class in the middle & higher income bracket (with a car), this city may lose the people who are at the best position to make this city better!