I have decided to avoid getting into UNWANTED discussions with folks who any way wont reform. So let me discuss the mathematics of Chennai realestate in a new Thread.
An hour ago, I called a Builder in Saligramam asking for the price of his flat. He quoted 5600 psft. I asked him about UDS and FSI and road width. He was building a clean property on 2 grounds, 8 flats with stilt and road width was 30ft. He was using an FSI of 1.67 which is perfectly understandeable.
Then I asked him " what is the price of land here ?"
Builder: 1.5crores to 1.25crores.
I: So I can offer you land there in a much better place than you are building.
Builder: I cant buy outright now sir, but 50:50 is ok.
I: How is 50:50 fine? For 3200sqft that I have you can build minimum 5000sqft even though I know you will build 5400sqft at 1.67. So what is your cost of construction?
B: 1500psft.
(Now this price is terribly high but I was ready to let him go with the price?)
I: So how can it be 50:50? You need only 75L to build 5000sqft?
B: See if I give you 2 flats worth 2500sqft you can yet get at 5600psft.
I: That is just 1.4cr for 3200sqft.
B: I can maybe give you another 10L or so.
I told him that even if I turned a builder and sold one flat I would have built the entire 4 flats but he was telling WITHOUT ANY MATHEMATICAL BACKING that he will need 1.5 flats. Then he said well I cant sell 1250sqft flat to which I said you can make 6 flats with new rules.
This went on till I said "get lost" or rather a "bye" and left him.
Now let us see the mathematics.
If I can get 5600 psft for 1 flat then cost of 1250sqft of flat is 70L. Let us assume I throw one 5L more and I will have the property ready even if I use this builder's rate of 1500psft. That rate is ridiculous and includes profits. In today's "builder in trouble" market, you can find a good contractor to build you at 1200psft.
Now if one flat sold at 70L then 4 flats cost 240L, so the builder should give you 240-75(his construction cost even at 1500psft)=175L.
He is throwing in 2 flats at 140L and maybe another 10L. So you might think it prudent to lose the 25L and take it.
However what guarantee do you have that you will get your money? Secondly in joint venture, your money is not in your hand. So if I got 150L outright now, in 2 years that will be worth 180L at 10% interest rate.
In other words, builders in Chennai are super cons! And remember, his investment is ZILCH (Zero).
So if I turned a builder with my own land, I can get the best of construction at 1200psft. Also I used 5000sft, which in reality can move to 5400sft even at 1.67 FSI. Today you can get even more since the third floor can be built after 3 years and if you keep those rights for yourself, then you got that too.
Let me ignore even the 3rd floor. With 5400sqft and price of 5600psft, I will need 5400x1200=64.8L to complete the project. I will find JUST ONE BUYER and charge him 5600psft, which means 5600x1350sft(since total built up area is 5400sft for 4 flats). I will get this 75.6L. I can use this 75.6-64.8=10.8L as pocket money for any price changes or troubles or legal charges or whatever. Net I get 3 flats all for me. I can sell them at the prevalent price after 2 years or get them booked at current rates and et 75.6x3=227L or 2.27Cr.
Now does it make sense to get 2.27Cr or just 1.5Cr is the question. How many of you earn 75L for 2 years? I bet most of you dont! Again you don’t need to be a fulltime builder. Just employ a good contractor and MANAGE him!
BETTER BECOME A BUILDER IS YOU HAVE YOUR OWN LAND!
(PS. Hope this helps some folks who wanted to sell their land in Mylapore!)

Incidentally if I reduced the price of flat by even 600 rupees my net gain is 2.27cr-600x5400=1.95cr. So all I need to do is SEARCH for one serious WORTHWHILE (meaning has a safe job) buyer.
Read more
Reply
97 Replies
Sort by :Filter by :
  • People in Glass houses ...

    Originally Posted by Natarajg007
    Now I must hasten to add that many silly NRIs on this board tend to believe that if people CANT cars in US, cars wont be sold in India. These are those unsuccessful folks from India who fled as cheap labour abroad. Now they use the same logic to talk about RE. However as it has been shown, Auto sales are booming. So will RE be left behind?



    Nats,

    Don't forget that, once upon a time, only a short time ago, you too were one of those cheap labour guys in the business. So, with that statement you are only cheapening yourself ...:D

    Besides, at least those "cheap" people are still at it making a honest living. As for you, you only degraded from a "cheap" export laborer to a really cheap RE speculator ...

    I rest my case ! ;)

    cheers
    CommentQuote
  • Originally Posted by Natarajg007
    Well I am only too curious to find out what these bear dreamers will do when the market shoots up again in the coming months?


    I am a bear and believe the recovery might take a couple of years and would not be a few months. If RE goes up in few months probably i will forget about getting a home inside city, live on rent and retire away from the city in a palace.

    India's growth which the govt was sure of growing at 7% until was revised to 5.1% and may be still lowered to 3% for 2009. I did not believe when people said India's growth is decoupled from the world and similarly I will not believe that car sales and RE are decoupled from the general economy. US was the first to go down in the world and looks like India is the last but India might be the last in recovery too. If India was immune, rupee should not be 52/$ should rather be 42/$...

    This is my logic and I could very well be wrong.
    CommentQuote
  • Originally Posted by wiseman
    Can and Surla,

    I agree with you. But when Nats comes out with stupid stuff that "Harvard, ... means little to me", I simply can't resist having a go!!! :D

    Nats: They mean little to you simply because you don't have the acumen to understand!!! :D

    cheers

    Hahaha... you are ignored...LOL!
    CommentQuote
  • Originally Posted by wiseman
    Nats,

    Don't forget that, once upon a time, only a short time ago, you too were one of those cheap labour guys in the business. So, with that statement you are only cheapening yourself ...:D

    Besides, at least those "cheap" people are still at it making a honest living. As for you, you only degraded from a "cheap" export laborer to a really cheap RE speculator ...

    I rest my case ! ;)

    cheers

    Wise Idiot, I did not sell myself to Americans. I was not working for Americans as a Cheap labour NRI!
    As for you, you are sold for Rs 50 per post to this NRI cartel. So please continue to write your crap as you dont have matter to create new posts.ROTFL.
    CommentQuote
  • Originally Posted by surla
    I am a bear and believe the recovery might take a couple of years and would not be a few months. If RE goes up in few months probably i will forget about getting a home inside city, live on rent and retire away from the city in a palace.

    India's growth which the govt was sure of growing at 7% until was revised to 5.1% and may be still lowered to 3% for 2009. I did not believe when people said India's growth is decoupled from the world and similarly I will not believe that car sales and RE are decoupled from the general economy. US was the first to go down in the world and looks like India is the last but India might be the last in recovery too. If India was immune, rupee should not be 52/$ should rather be 42/$...

    This is my logic and I could very well be wrong.

    Surla, your writing is interesting but what do you mean you will retire and live in a palace. Maybe you feel living away from the city in a large farmhouse is palace.
    All I want to tell you is that American economy and for that matter many Western economies work very very differently from Indian economy. I am not sure that I will be able to explain this in a few lines on this board. However one point you need to note and then rack your brain is. In USA salary grows by 5% to 10% p.a. and I know a 10% hike is for the brilliant. In India I have had 30% cumulative growth in my salary from 1987 to 2003 when I quit the industry. Between 2003 and 2008 donkeys in SW, Broking and many other industries had salary move up 5 times. This is an anamoly if you think AMERICAAAAN!
    Next Dollar value for stuff has not changed to the best of my knowledge from 1988 when I first VISITED (not got EMPLOYED like WiseSlave!) USA until now. A dollar yet purchases almost similar goods, but in INdia the rupee has depreciated from 13s or so to 52+ as I write this.
    Many foolish Indians (I suspect I might need to add u to that list) who went to USA and enamoured it, did not use their native intelligence and never learnt about India and keep harping that what happens in USA will happen in the rest of the world.
    I know Americans by nature are short sighted and think that there is only USA in the World, like Bombayas think there is only Bombay in India. However short sighted people will realise the need for spectacles when they STUMBLE.
    Take care Surla and the right knowledge spectacles or you will trip over your own incorrect knowledge!
    CommentQuote
  • Originally Posted by wiseman
    Nats,

    Don't forget that, once upon a time, only a short time ago, you too were one of those cheap labour guys in the business. So, with that statement you are only cheapening yourself ...:D

    Besides, at least those "cheap" people are still at it making a honest living. As for you, you only degraded from a "cheap" export laborer to a really cheap RE speculator ...

    I rest my case ! ;)

    cheers

    Wiseman, did you sufficient of your favourite food today?
    PS. Wiseman's favourite food is Diarrhea.
    CommentQuote
  • Chennai Land is yet CHEAP

    The other day I was browsing an advt in TOI Bangalore and a person was selling a piece of land in Basveshwara Nagar. The price Rs 9000 psft. Now to compare Basveshwara Nagar (BN) with a place in CHennai. Well BN is like a suburb of Malleswaram almost 5-6 km from Malleswaram.
    Now compare the same with Chennai. A suburb of TNagar...well that is what KK Nagar, Saligramam and the rest are. A suburb of Adayar and that is what Kottivakkam and Palavakkam are. And Velachery itself is a suburb much better located than BN.
    In all these places price of land is not anywhere close to 9K psft. Take Vadapalani, Saligramam area. We are gonna have Forum Mall, there is Big Bazaar and the underground subway is going to be there. So in reality it should be compared with Koramangala not BN in Bangalore. So the price should be around 15000 psft but well people try to ask land owners to sell for Rs 7K psft if they are lucky and dirty brokers prefer a price of Rs 5K psft. In other words land price in Chennai is just toooooo low for what it is worth.
    Now take the price of a flat and then you will find Bangalore is too cheap. In Malleswaram a flat can be got for Rs 6 to 7K psft. Here land costs close to Rs 15-20K psft. If you take a Mylapore or TNagar with similar land prices, flat prices are as high as Rs 15K. Why?
    Reason is FSI in Madras is 1.5 full stop. Even if MSBs where FSIs go to 3.5 the dirty builders price it very high. So a normal flat in Saligramam costs Rs 5.5K psft and a Ceebros or Appaswamy cost Rs 6K psft even though they use 3.5 FSI. So it shows builders in Chennai cheat. Average Madrasis dont seem to think one bit about this. They are more busy chatting their life out on mundane stuff!
    In summary it is better to land in Chennai (and dont talk about my vested interest... since I dont plan to sell my lands anyway!!) and best place to a flat is Bangalore (again I dont sell flats either nor land in Bangalore!!). Ofcourse this board is filled with foolish writers who are talking about a 20% discount in prices in some god damn place in Siruseri or Medavakkam and say that prices will fall.
    Simple logic. DONT SELL YOUR LAND FOR A SONG. And flat to live, ONLY LAND TO INVEST. Since you can reuse land, you just cant do much with flat. So the cheapest flats and you get them in Bangalore!
    CommentQuote
  • In summary it is better to PURCHASE land in Chennai (and dont talk about my vested interest... since I dont plan to sell my lands anyway!!) and best place to PURCHASE a flat is Bangalore (again I dont sell flats either nor land in Bangalore!!).

    The above correction is to be added to earlier message from me as this forum makes the word B U Y disappear!
    CommentQuote
  • Originally Posted by Natarajg007
    In summary it is better to PURCHASE land in Chennai (and dont talk about my vested interest... since I dont plan to sell my lands anyway!!) and best place to PURCHASE a flat is Bangalore (again I dont sell flats either nor land in Bangalore!!).

    The above correction is to be added to earlier message from me as this forum makes the word B U Y disappear!


    Hey Nats. Do you really own a land?
    CommentQuote
  • Originally Posted by Natarajg007
    In summary it is better to PURCHASE land in Chennai (and dont talk about my vested interest... since I dont plan to sell my lands anyway!!) and best place to PURCHASE a flat is Bangalore (again I dont sell flats either nor land in Bangalore!!).

    The above correction is to be added to earlier message from me as this forum makes the word B U Y disappear!


    Agreed. It is better to a land at chennai. But when?

    After 1 year. ie when the prices are falling at the bottom most.

    Anyway saligramam land will not go 2006 level any more
    CommentQuote
  • Originally Posted by Natarajg007
    Well I am only too curious to find out what these bear dreamers will do when the market shoots up again in the coming months?



    Dear Nat

    When the market shoots up again we will start dreaming of purchasing a flat in the heart of city i.e., Saligramam from a reputed builder and promoter who will be living in bangalore and quoting price Rs.25000 psft.

    Thanks

    chataara
    CommentQuote
  • Thanks buddy! LOL!
    CommentQuote
  • Originally Posted by strongsville
    Hey Nats. Do you really own a land?

    What do you expect me to say?
    CommentQuote
  • Originally Posted by Natarajg007
    What do you expect me to say?



    Dear Nat

    Say anything about RE.

    Dont Use the words "Pitchakaran", "Diarrhea", "chamcha", "Jalra"

    Thanks

    chataara
    CommentQuote
  • Originally Posted by chataara
    Dear Nat

    Say anything about RE.

    Dont Use the words "Pitchakaran", "Diarrhea", "chamcha", "Jalra"

    Thanks

    chataara

    Why is Diarrhoea a patented word by Wiseman? Do you know, he is the one to introduce that word into Indian Real Estate Forum?
    CommentQuote