'4% land enough for all Indians': Startup investor explains why homes are priced like gold

India has more than enough land to house its entire population. Yet, for millions, owning a home feels impossible.

"India just needs 4% of land to house its entire population with 1 floor buildings," writes startup investor Aviral Bhatnagar on X. But in cities like Mumbai, homes now sell for ₹50 crore or more—priced nearly 10 times higher per square foot than even American metros.

The disconnect isn't about land scarcity—it’s about broken regulation, entrenched corruption, and zoning laws that keep prices sky-high.

India’s urban real estate unaffordability stems from multiple entrenched issues. A key driver is the country’s restrictive Floor Space Index (FSI) norms—capped between 1.3 and 3.5 in metros. 

Compared to New York’s FSI of ~15 or Singapore’s ~25, Indian cities limit how tall buildings can rise, cramping supply and inflating land values.

Developers further aggravate the problem. They often release only a handful of units initially—sometimes just 5 out of 100 apartments—to create artificial scarcity and jack up prices in later phases.

Adding to the dysfunction, real estate remains a preferred parking ground for black money. In Mumbai, fewer than 10 families reportedly own 20% of the land, while about 500 families control half the city's real estate, concentrating ownership and warping market dynamics.

Sarthak Ahuja, an investment banker and advisor, recently highlighted the gravity of the problem. "If you look at the Price to Income (P2I) Ratio for houses in India... the average P2I has reached 11—which means you need 11 years of full income to be able to afford a house... and if you assume 50% of your income goes into expenses, that's over 20 years of savings in buying a house!" he explained.

Ahuja's advice is clear: unless you can pay 50% of a home’s price upfront and keep EMIs under 35% of your net income, renting remains the smarter choice. He also recommends exploring Tier-2 cities, which offer better affordability and growth potential.