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Buy or Not 2050 Sq Feet Land in 5 crore Chembur Mumbai

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Buy or Not 2050 Sq Feet Land in 5 crore Chembur Mumbai

Last updated: July 10 2014
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  • Buy or Not 2050 Sq Feet Land in 5 crore Chembur Mumbai

    I am in the process of finishing up the sale of a family bungalow at Chembur, close to the Golf Course.

    In lieu of Rs. 5 crore, I've asked the builder to give me space. He has offered me 2050 sq. feet carpet. Is that a fair deal? It works out to be 24390 / sq foot carpet.

    One of the reasons for doing this is that I save significantly on stamp duty - so this 5 cr. is basically inclusive of all taxes. Let me know if this is a good deal? Or is it possible to negotiate more?
  • #2

    #2

    Re : Buy or Not 2050 Sq Feet Land in 5 crore Chembur Mumbai

    Land cost is always different and more that psf of a flat. One should consider the land rate psf (excluding any value to the existing structure) and then add cost of construction for the full available FSI to see how much approximately is the builder gaining.

    Apply current rate to the flat that will be built looks conservative because the cost of construction is much lower than 24k psf and builder will be earning the rest.

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    • #3

      #3

      Re : Buy or Not 2050 Sq Feet Land in 5 crore Chembur Mumbai

      Originally posted by invidious View Post
      I am in the process of finishing up the sale of a family bungalow at Chembur, close to the Golf Course.

      In lieu of Rs. 5 crore, I've asked the builder to give me space. He has offered me 2050 sq. feet carpet. Is that a fair deal? It works out to be 24390 / sq foot carpet.

      One of the reasons for doing this is that I save significantly on stamp duty - so this 5 cr. is basically inclusive of all taxes. Let me know if this is a good deal? Or is it possible to negotiate more?
      What is the superarea/carpetarea of your standalone house in Chembur. This will help the members provide you more meaningful answers.

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      • #4

        #4

        Re : Buy or Not 2050 Sq Feet Land in 5 crore Chembur Mumbai

        what is essentially valuable in a sale of bunglow is the the Value of Land. You need to specify the land area currently occupied. On a very conservative side It looks very low. First arrive at the value of compensation for the land. The Value of the Structure would be added to that and then decide how you want to receive it, cash or kind. Land in mumbai is like a Gold mine, Do not forget that

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        • #5

          #5

          Re : Buy or Not 2050 Sq Feet Land in 5 crore Chembur Mumbai

          you need to inform the land area as all calculations are based on that. The FSI and TDR are calculated based on the plot area. even i feel that the builder offer is conservative. Is he giving any remuneration in addition to the flate

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          • #6

            #6

            Re : Buy or Not 2050 Sq Feet Land in 5 crore Chembur Mumbai

            The area of the plot needs to be known to assess if the offer is appropriate. Plus there are adjustments on account of fungible FSI, TDR loadable and road set-back, which needs to be calculated. Also if the bungalow has a good frontage or is in a market or commercial area, offer would higher, as there is a scope for developing commercial or office space.

            You can have discussion with a local architect to understand the full impact, and the area available. It is the plot which has value to the developer.

            I suggest that your family should go in for a joint venture with the developer by forming a partnership firm with him, having a percentage share of profit. You may benefit from rising property prices. You can seek advise on the tax implication.

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            • #7

              #7

              Re : Buy or Not 2050 Sq Feet Land in 5 crore Chembur Mumbai

              Thanks for your replies

              1. The current rates in the vicinity are about 33,000 a square foot carpet. In the newer constructions, even higher.
              2. I do realize that a JV with the builder would have been profitable. However, due to the intransigence of certain family members, this seems to be the only way forward - an outright sale.
              3. The plot is 780 square meters - an FSI of 2.7 - works out to be 22668 sq. feet to be constructed.

              Thanks for your replies.

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              • #8

                #8

                Re : Buy or Not 2050 Sq Feet Land in 5 crore Chembur Mumbai

                Originally posted by invidious View Post
                Thanks for your replies

                1. The current rates in the vicinity are about 33,000 a square foot carpet. In the newer constructions, even higher.
                2. I do realize that a JV with the builder would have been profitable. However, due to the intransigence of certain family members, this seems to be the only way forward - an outright sale.
                3. The plot is 780 square meters - an FSI of 2.7 - works out to be 22668 sq. feet to be constructed.

                Thanks for your replies.
                Based on the above data, assuming your plot has a 22500 sq ft of carpet area construction potential, with carpet area rate of 33000/psf.

                So overall sale potential to the builder at 22600 x 33000 = 74.5 crores.

                #1. Assuming total construction cost at Rs 2000/psf (if it is a premium project)
                #2. Local politicians/MLA/etc costs of Rs 3000/psf
                #3. Cash payments and speed money to BMC and other govt agencies at: Rs 3000/psf
                #4. Actual govt levies, licenses etc: Rs 500/psf
                Total: 2000 + 3000 + 3000 + 500 = 8500/psf

                Total cost of project to the builder = 8500 x 22000 = Rs 18.7 cr

                At the very least, Minimum Profit to the builder = 74.5 - 18.7 = 55.8 cr
                Maximum profit can be another 50% on top of that, if they transfer TDR from elsewhere or get additional money from buyers for club charges, infrastructure charges, parking charges etc so around: 83.7cr

                So now, take your call, what portion of the profits you would want for your land?
                Generally the land owner gets 25%-35% of overall profits.

                So tentatively bargain between the 14cr to 20cr figure for selling off your land at the very least.
                Last edited July 9 2014, 08:34 PM.

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                • #9

                  #9

                  Re : Buy or Not 2050 Sq Feet Land in 5 crore Chembur Mumbai

                  Thanks for your reply.
                  Last edited July 10 2014, 02:21 PM.

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                  • #10

                    #10

                    Re : Buy or Not 2050 Sq Feet Land in 5 crore Chembur Mumbai

                    Originally posted by invidious View Post
                    Thanks for your reply. Yes, currently the builder has offered us 23 cr for the plot. Out of this my share is about 5cr. In this he is willing to give me one floor which is approximately 2050 sq. feet carpet + a few parkings - I am negotiating for 4. As I said before, this is inclusive of all taxes. So, would you say I take the space? A ready made flat in the vicinity with the same space and 3 parking spots is between 7.5-8 cr + Stamp Duty.

                    I want to avoid capital gain tax - so I will have to invest it in a property anyway. If there is some negotiating space - would he be able to give me the same space for about 4 cr? Or is that asking for too much?

                    Thanks once again for your insights.
                    oh, that way, it is a great deal for you at 2050 carpet + 3 or 4 parkings. It is almost like buying a 3500-4000 sqft super builtup flat.

                    If you just feel like bargaining, then ask for some cash payment (30L-40L) in addition to the free flat at the time of signing the agreement.

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