Wallowing in self-pity is never a great idea, but there are times when first-time home buyers in metro cities can’t help but feel desolate. Every attempt to own a two-bedroom apartment within city limits is an exercise in futility as the revised budget gets outpaced by illogical overpricing. 

An interesting statistic that shows the degree of distortion is the price-to-rent ratio, something that the Reserve Bank of India, too, has highlighted of late. Take, for instance, the price of a 2BHK apartment in the western Mumbai suburbs of Borivli, a good 50 km away from the heart of the city. For a 2BHK that is a 20-minute potholed drive from the railway station, costs ₹1.25 crore and fetches an annual rent of ₹1.8 lakh, the ratio works out to 69. For a similar-sized property in the heart of the city, say, Lower Parel, the ratio works to 36.5, if you consider a price point of ₹3.5 crore and an annual rent of ₹9.6 lakh.

While these prices and rents are by no means “the” benchmark for either location, there is no denying that real estate is increasingly becoming surreal. Just as a stock cannot sustain a higher multiple without an underlying increase in earnings, real estate prices, too, need a concurrent increase in rental values to justify high rates. 

Today, a multitude of regulatory approvals needs to be obtained by developers. Speed money spent for these approvals often inflate project costs and that is ultimately passed on to buyers since developers don’t want to part with their share of usury. In light of such vested interests and accommodating bankers, a slide in prices will take its own time coming. This issue’s cover story, All style no substance  tries to make sense of the different variables at play. 

For those who like it cold, we have a story on how Carlsberg is making inroads into the Indian beer market: A heady brew. Serving it strong is helping the brewer gain market share.