Prof. Jayanth R. Varma’s Financial Markets Blog

A blog on financial markets and their regulation

Land as an asset

The doyen of Indian housing finance, Deepak Parekh is today quoted
as saying that land is no longer an asset (“There
is no need for irrational pessimism
”, Business
November 7, 2008). Parekh says “Land prices
have collapsed, land is no longer an asset – people don’t
want land as a security. Today, there is surplus land, low demand
… the value of land is probably half of what it was …”

This explains why real estate companies reportedly have to pay 35%
interest after providing collateral (land) notionally equal to three
times the value of the loan.

Another interesting statement in this context is in a speech
by Fed Governor Kevin Warsh (hat tip Calculated
) “We are witnessing a fundamental reassessment of the
value of virtually every asset everywhere in the world.”


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