Monday, May 25, 2009

Markets in Everything: Tata's $8,000 Condos

BUSINESS WEEK -- Tata, the Indian company that made worldwide headlines with its $2,000 Nano car, now plans to build 1,000 tiny apartments outside Mumbai that will sell for $7,800 to $13,400 each. The company plans to roll out low-cost projects outside other major cities.

Tata’s housing division is targeting a segment of the market that was largely overlooked during the housing boom. India’s builders were concentrating on building shiny new high rises and mansions on golf courses. Builders were after profits, but they were also trying to justify their fast-accelerating land costs, especially in and around Mumbai (formerly known as Bombay) and other major cities.

But some business consultants (most prominently, C.K. Prahalad) were arguing that companies would profit handsomely if they target the “bottom of the pyramid” where the bulk of consumers are. It looks like Tata is taking that advice.


At 5/25/2009 10:07 PM, Blogger QT said...

The Mortgage to GDP Ratio (ratio of outstanding home loans to GDP) in India is very insignificant in comparison to the other countries. In the developed countries the ratio varies from 25% to 60%. For the year 2001,the mortgage to GDP ratio in India was at 2.5%.Hopefully, Tata will also create a mortgage division which could enable many more people to afford a home.

Thank you for an interesting piece of international content.

At 5/26/2009 3:19 PM, Blogger misterjosh said...

At about 350 square feet, that sounds ridiculously small, but I acknowledge, that for millions of people in the slums, this would be a huge step up.

At 5/26/2009 4:43 PM, Anonymous Jim Egnor said...

Of would hope said housing would also include the use of decent construction material.

Somehow, I doubt it.

I do like the idea of the marketing premise and promise. Maybe now someone in Mumbai can market the idea of offering mortgages to the lower income Indians who are required to have homes by social mandate and then offer them really, really low rates and...then...invest heavily in the Indian real estate market and then maybe, just maybe offer investment opportunities back to us and then we'll all make lots and lots and lots of money.


I think this has been done before but my historical recall seems to be directly proportional to my recent lack of medication over the weekend.

QT---I like your style.

(No...the lack of medication is not responsible for that thought)

At 5/26/2009 4:47 PM, Anonymous Jim Egnor said...

Addendum...I suppose from a purely mercenary standpoint of wanting to make lots of money so that I can actually retire someday---it would be nice to know if the construction firms hired by Tata are publickly owned.

(Hmmm...must remember I wrote this)

At 5/26/2009 8:08 PM, Anonymous Cheech (in) Marin said...

We have homes like these for $8000 in America too.

We call them coffins.

Or Detroit, take your pick.

At 5/26/2009 9:08 PM, Blogger KO said...

I've never been to India, but in other places in Asia like Thailand and Hong Kong, many people live in small studio type places with just the room and an attached bathroom.

Food prep is basically outsourced because you can eat downstairs for cheaper than cooking your own food.

These look pretty promising. I'd guess if people had the choice, most would choose one large room rather than a separate bedroom. That'd be appealing if a family had to live there, but it'll more likely be younger, single people living away from their families.

At 5/26/2009 9:09 PM, Anonymous Jim Egnor said...

Detroit? $8000--?? You're getting swindled if you're paying even that much.

At 5/27/2009 10:32 AM, Blogger sethstorm said...

A maker of golf carts now rehashes a bad hotel room into an actual residence.

At 5/27/2009 10:57 AM, Blogger Marko said...

Aren't these the condos that blew up in Quantum of Solace?

At 5/28/2009 7:02 PM, Anonymous Anonymous said...

There are a few construction companies(ARA, Homex, Patos, etc.) here in Mexico doing similar projects. They use movable forms and mass produce quality houses fast--usually one week. Cost from $14K to about $35K for 2BR units. Areas include parks, wide streets etc. Seems to be OK.

At 5/28/2009 10:16 PM, Anonymous Jim Egnor said...

Anonymous---any issues regarding the quality of the construction there in Mexico?

At 6/01/2009 3:20 AM, Blogger OBloodyHell said...

> We call them coffins.
> Or Detroit, take your pick.

There's a difference?

At 6/01/2009 3:22 AM, Blogger OBloodyHell said...

> A maker of golf carts now rehashes a bad hotel room into an actual residence.

seth, go live in f***ing cardboard box on the streets of Mumbai for ten years and then say that.

You're a d***head. *Really*.


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