Who really made a fortune from the 2002-2007 Real estate boom?

Do you think it's the IT professionals who made merry in the 2002-2007 IT boom? Well, I would say 'Yes', if your question was about who lost their money!

Let's get a bit deeper in Chennai. When the boom happened, people started buying lands, apartments and homes both within and outside the city. But if you look at the volume of transactions that happened within the city and outside the city, suburban transactions are 400% more than the former. (For this comparison, I considered only places within 45km from Chennai, leave alone the investments that have gone into smaller cities!).

In their quest to own a piece of property, affordable IT professionals lost their money to people who owned these land pieces (of course with the help of banks). So thr IT professionals have spent their money and it's the seller who actually gained. They not only lost or spent their 'possessed' money but also their future savings!

If you argue not everyone bought land parcels, think how builders get lands for apartments?. Except very few builders who had huge land banks in suburban areas, most of the builders bought lands during 2002-2007 period. So, the builders too, have actully spent!. They made a killing profit both from top and bottom, but again, most of the builders have re-invested in land banks again in the assumption that real estate bull market would last forever!.

So, who actually gained? Now, who typically owns lands in areas 45km away from Chennai? Well, lower middle class people (no way related to IT), small business people, brokers and very few farmers. These very people are those who made a killing during the boom period. I mention 'very few farmers' because most of the farmers did not have any understanding of the boom and so gave Power of attorney to brokers, who could see both the unsuspecting farmers and affordable buyers. Pity, many of the farmers who gave PoA to brokers did not even know how much their lands were sold for!

However, this money flow itself is not unique in India. Infact, its a well known real estate phenomenon called 'Gentrification' which means 'affordable people displacing the less affordable ones'!
So, if you track the money flow, its from 'outside' clients (US, Europe, and middle east)-> Builders -> Brokers -> Small business people, lower middle class people and farmers.

Good for the society, as money spreads to all strata! But, bad for the govt, as many of these people neither pay Income tax nor register the property at the market value (thus generating huge black money)!