Enrico Fabian for The New York Times
SOLD: $29 Million This crumbling home from the British Raj, in New Delhi’s most prestigious section, commanded top dollar in a public auction.
NEW DELHI — The fading bungalow at 38 Amrita Shergil Marg does not immediately shout real estate bling.
There is no tennis court, no infinity pool, no Sub-Zero refrigerator or walk-in closet. The paint is chipped, the bathrooms are musty and the ceilings have water stains. The house may ultimately be torn down.
Yet when it went up for public auction, the winning bid was $29 million. And many neighbors consider that a bargain. One block away, a gracious if not quite Rockefeller-ready residence once leased by the Mexican ambassador is now reportedly on the market for more than $100 million. Other nearby houses are going for $40 million to $70 million.
“The price of the Mexican residence is $110 million,” said Jorge Roza de Oliveira, Portugal’s ambassador to India. “You can buy a home in New York and Miami and Lisbon and London and keep a lot of change for that much.”
Real estate prices in the heart of New Delhi, especially for the bungalows built nearly a century ago during the British Raj, are among the highest in the world.
Though India’s economy has cooled, the demand for property in elite areas remains so strong that even finding a house for sale is tricky: formal listings do not exist; prices usually circulate by word of mouth. Transactions often require some “black” money, or stacks of cash paid under the table to avoid taxes.
The buyers are often Indian industrialists looking for a trophy property, a real estate Rolex. Or, real estate agents and sellers say, they can be politicians or their proxies, who often pay with trunks of cash.
For their money, buyers get a lovely piece of land and a piece of history, if not much in the way of amenities. Many houses require a major overhaul. Services, if far better in these elite areas, are still inadequate: drinking the tap water is not advised, and power failures remain an irritant.
The obvious question about the prices, in a country where hundreds of millions of people still live on less than $2 a day, is: Why?
To a large degree, India is experiencing the sort of real estate boom common to big, emerging economies. When Japan’s economy was soaring in the 1980s, prices in Tokyo were so frothy that the 845-acre compound of the Imperial Palace was valued at more than all the real estate in California. More recently, China has seen a boom, with real estate values rising in some cities by 500 percent.
But the spike in New Delhi is also being fueled by ego, status and some unique distortions in India’s economy. Few properties come available in the leafiest, most prestigious section of the capital, known as Lutyens’ Delhi, because the area is mostly dedicated to government housing. Powerful government ministers live in British-era bungalows with stately lawns of several acres, while lesser officials are eligible for different categories of government housing in an oasis largely separated from the rest of the chaotic capital, where many people live crowded into slums or shanties.
“This is the best part of Delhi, the core of Delhi,” said Munish Kumar Garg, who oversees the allocation of government housing. “If these properties in Lutyens’ Delhi were put on sale, there would be a queue two kilometers long.”
Mr. Garg, the director of the government’s Directorate of Estates, controls one of the more valuable residential real estate portfolios in the world. Asked how many New Delhi properties fell under his agency, he shrugged. “It would be difficult to know,” he said. “Maybe 10,000.”
It was a British architect, Edwin Lutyens, who in the early 1900s designed what is now the governmental heart of the capital. Beyond the grand buildings erected as the seat of British imperial power, Mr. Lutyens and other architects also built a residential bungalow zone of whitewashed single-story homes surrounded by verdant gardens. When India won its independence in 1947, the British moved out and the Indians moved in.
Today, power in Delhi can be measured by where a politician lives. The Directorate of Estates divides properties into eight categories, with Category 8 bungalows, the most exclusive, reserved for ministers and other top leaders. Former prime ministers and presidents, and their spouses, are allowed to remain in Category 8 housing until death.
Given the shortage of such housing, the recent death of former Prime Minister Inder Kumar Gujral has spurred jockeying over who will get the bungalow.
Navin Chawla, who was India’s chief election commissioner from 2005 to 2010, lived with his wife in a Category 8 bungalow on six acres, with accommodation for 17 servants, including a separate house most likely worth many millions of dollars. When his term ended, so did his tenancy.
