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[MottKennedy]

The values of all goods and services are the result of the variations in demand and supply in the market. It is through the demand from the community that all values for a particular product are created and established. If demand increases relative to supply, the price of a commodity rises. This principle is generally applicable, but it is most noticeable only when supply tends to be fairly fixed, as is seen with vintage cars, stamps, antique furniture, landed properties and even with the luxury Apartments in Kerala .

Under a system of private property rights and market allocation of goods, the possessor of a commodity, wherever demand increases relative to supply will obtain a higher price and thus a windfall gain – known in economics as ‘economic rent’. But to label the windfall gain, which accrues to landowners through increased demand for land as ‘incentives gained through taxes’, and to appropriate it entirely, is to select a special form of ownership for punitive treatment.

The value of all goods which are not elastic in supply will increase as demand increases as a result of higher incomes, a change in tastes, a growth in the population, and so on. Land and buildings are no exception to this general rule. To call this gain ‘incentives from development of a property’ and to tax it at a higher rate rests solely on a political decision made possible because landowners are a comparatively smaller group in the community, with a correspondingly small voting strength.

When the global economy is witnessing a slowdown, the property market in Kerala is yet to feel the pinch, mainly due to the different pattern of development and the different approach to management followed by the government and the leading private property developers. Due to falling inflation, the investors are upbeat and thus Kerala is witnessing increasing inflow of investments into real estate like never before.

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