Real Estate Is a Risky Business in Bombay

It’s a rough and tumble game. Bodyguards on alert. Police escorts for some. Guns kept at the ready.

But one can never be too careful when it comes to the the real estate market of Bombay.

“We’ve told our members: Keep guns ready. Before they shoot, you shoot,” said Kumar Venkata Satyamurty, the leader of a property developer’s trade group.

The bright lights of Bombay--its glamorous film industry, its booming economy--have been a magnet for builders and for mobsters looking to claim a piece of the profits.

Since April, five builders have been shot dead in India’s financial capital. Police point to gangsters. They say the bloodshed is the result of a developer-mob understanding gone bad.

In 1995, Bombay’s real estate market exploded after the government introduced free-market reforms. The price of prime office space made this city the most expensive in the world, a survey by Colliers International Property Consultants showed: That year, a square foot sold for $970--slightly more than the rate in Tokyo and four times that of Manhattan.

No corporate leader wanted to be without an office in upscale South Bombay. But property was scarce.

Owners and developers hoped to cash in on the boom by selling property or tearing down buildings to make way for office towers. Some of them, however, first had to get rid of unwanted tenants. They turned to mob thugs.

But soon the ride was over and the market began to soften. At the start of 1997, a square foot of Bombay office space was going for $675.

Today, a room with a view of the Arabian Sea can be had for about $570 a square foot in one of the office towers that house leading software, pharmaceutical, engineering or manufacturing firms.

Prices may have slid, but the mobsters stuck around. No longer needed to strong-arm unwanted tenants, they turned to extortion--demanding protection money from developers or entertainment industry players.

Those who fail to pay up receive threatening calls, or are killed.

Satyamurty, founder of the 10,000-member Federation of Accommodation Industries of India, said mobsters have become too expensive.

“Even those builders who did pay the underworld cannot anymore. But the gangs don’t care if the industry is doing well or not,” he said.

One builder, who spoke on condition of anonymity, said he learned to estimate the strength of an extortionist by the amount of money demanded. The big gangs ask for the equivalent of about $140,000, while small-time criminals start at about $8,500, the builder said.

While building still continues in Bombay, spreading out to less glamorous neighborhoods, construction sites no longer have boards advertising the names of developers and architects. No one wants to be easily traced by mobsters.

*

Business people have written to the government asking for police protection. Since June, police have agreed to escort 10 builders, but officers turn down anyone they suspect of having criminal links.

“Those who live by the sword die by the sword,” Bombay Police Officer Charansingh Azad said.

“The underworld steps in when there are big property disputes or when the builder himself fishes for trouble by contacting them for illegal work,” said Azad’s colleague, Ranjit Sharma.

Builders who can’t get police help can turn to private security agencies for protection--but not always with success.

“We don’t take all the cases that come our way because nefarious builders are a risk for us,” said Diwan Nanda, managing director of Tops Detective and Security Services.

The firm handles security for 30 builders who pay from about $570 to $11,400 a month for services such as 24-hour armed guards and close-circuit television.

Arun Gawli, a former gang leader who police say is involved in extortion rackets, said it is the developers who are corrupt.

“They are always on the lookout for strongmen to throw out tenants,” he said.

Gawli has been jailed on various charges, including sheltering criminals and extorting money. But that’s all over now, he said.

After finishing an eight-year prison term, he started a new life this year: He launched a political party.