Measuring risk on investment in informal (illegal) housing: Theory and evidence from Pune, India

Kapoor, M and le Blanc, D (2008) Measuring risk on investment in informal (illegal) housing: Theory and evidence from Pune, India. Regional Science and Urban Economics, 38 (4). pp. 311-329.

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Abstract

In this paper we analyze a household's decision to invest in informal (illegal) housing in developing countries. Using a simple model of housing supply, we show that the difference in the rates of return on housing investment in the formal and informal sectors reflects the additional risk associated with the latter. Using household survey data from Pune (a large city in India), we estimate this risk premium in the city to be approximately 22%, or 150 basis points. We use our approach to estimate the informal risk premium for cities in other countries based on results from previous studies.

ISB Creators:
ISB CreatorsORCiD
Kapoor, MUNSPECIFIED
Item Type: Article
Uncontrolled Keywords: D23; Eviction risk; India; Informal housing; Investment; Low-income housing; R21; R31; R38; R52; Slums
Subjects: Business and Management
Depositing User: Veeramani R
Date Deposited: 31 Oct 2014 22:12
Last Modified: 01 Nov 2014 05:19
URI: http://eprints.exchange.isb.edu/id/eprint/105
Publisher URL: http://dx.doi.org./10.1016/j.regsciurbeco.2008.03....
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