Many on this board including the so called Wise and also the Sethus to Jadhavs have a problem of my pricing on land. Just 2 minutes ago I called up a builder in Urapakkam. He is selling a flat. This is not on the better side of the Urapakkam and is quite some distance from the Railway station....1.5km. I know there are no shops on this side either and development is tardy. He was quoting a price of 2600psft on the advt posted in Oct 2008. On phone he quotes 2400psft. I said that was high. His logic...land price is 30L per ground! and it increases to 35L per ground if you are a bit closer. Then he says..."saar price of construction is also to be taken na... and he says 1K psft".
Let us come to the bare mathematics. Let us assume he wont build 2 times the land area even though that is possible in todays new Master plan but uses only 1.5 as FSI.
So it works out like this (all figures in rupees).
Cost of land = 30L/2400sft = 1250psft
Cost of land needed per sqft of building at 1.5 FSI = 1250/1.5= 833psft
Cost of construction = 1000 psft
So net cost incurred is 1000+833=1833psft.
Giving him a Fair margin of 200 rupees profit psft we can assume that 2033 is a fair price but in reality he charges 2400. So he yet has a Safety Bumper margin of 2400/2033= 18% over an above his fair profit margin. Now remember he would most likely have got a deal with the land owner where he will repay the landowner over period of time. So the builder's investment is zero on the land. Next he constructs using the buyer's money. Nowadays that is where he might be chewed a bit, since bookings are not fast enough. So he has to pay that interest portion for his construction activity.
Finally I assumed FSI=1.5. Most builders easily take this number to 1.8 and they also price car parking etc as separate. So if u use 1.8 in the argument and add 1.5L for car parking as this builder quotes it will mean his price is about 2600psft and his cost of land is 700psft. So his Safety Bumper margin is
2600-1000-700-200=700psft.
In other words he can yet reduce his price by 700psft and go home with a fair profit of 200psft.
Why am I saying this?
a. As many on this board with almost rudimentary Mathematics knowledge seem to say (rudimentary as in class 3 and no better even if one of those shit colleges gave them a B.E. degree sadly though!) if DLF reduces price by 400psft, it does not mean RE market is crashing. Just that it is stabilising at best and the pinch is felt for the EVER CONNING BUILDERS.
b. Let us assume that 2600psft is the end price and 1.8 FSI. Then if you back calculate (2600-1000(cost of construction)-200(fair profit))=1400 is the cost of land you are actually paying that too at 1.8FSI. So price of land is 1400*1.8=2520psft which translates to 60L per ground. So it is clear that if you have land (like I do) and I just become a builder I will gain 60L-30L=30L for my land. Being fair I try to ask for 45L for such a land and I know on the worst day the biggest Mathematical idiot on this board will buy it for 35L. So why should I sell land? Or why should anyone sell land...Unless he/she is hardup for money!!

In net, the builder in Chennai is minting money like mad, and in recent times his minting has come down. This will mean slightly cheaper flats. However in the process land price wont come down but with more of the buyers becoming SANER (move from Class 3 to Class 7 ... LOL ... Hopefully Wiseman reaches Class 7 soon!), they will prefer to buy land and build homes than flats.

Only when that class also disappears will there be a RE collapse. In Bangalore (I mean proper city...not Whitefield or Devanahalli which is almost same as Chengalpet or Tindivanam in development!), price of land to flat is extremely clean. Builders have clean profit margins and they are able to sell their property much more fairly than in Chennai. Ofcourse the Brigades who try to mint money have got chopped in the process. So Brigade which was quoting fancy prices in Rajaji Nagar has been forced to take a lot of shit, with FSI as high as 4-4.5 while the normal flat in that vicinity having hardly priced any bit lower.

In summary, if you want a flat to live tommorow (not after 2 years like India Bulls is selling in Medavakkam!) then buy it at that fancy price ... after all 2600psft and 2200 psft wont matter much in the long run as u might as well stay in your house today than pay rent. However if you are an INVESTOR and have cleared Class 7 mathematics (not by mugging but by understanding!) then you better buy Land for investment. If you book a flat with a long delivery time and then cry, especially if you are losing your job like that Fidelity guy, then u can use abuses like That HECK of a Fool or Like Jadhav the Bus driver, but in reality you need to improve your brain. So go to the nearest Mutton shop and try to fit that brain into yours! LOL!
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  • As an after thought I did do some research on Tamilnadu interiors. Land for an old house of our family in a place in Karur has a guideline value of 560 psft. That means 13.4 lakhs per ground. Now this price is just the guideline value. In TN the guideline value should atleast be muliplied by 3 in most places to get market value, especially as guideline value is old and also because most transactions have a big black value inserted. So let me just take a multiple of 2. That means a ground in this place is around 25 to 30L. We have rented this old house for some 700 rupees almost for a song as we have no interest there! The question is if in the heart of Chennai our friends expect corrections so big does it sound logical when in Karur (that too in a slightly off track portion of it) a ground costs 25Lakhs.
    So those who are dreaming of a RE collapse will very well enjoy the fun of Lotus Eaters.
    Other than hallucination of the poor folks there is not much downside in RE. Infact if you want to buy this ground in Karur with a house, it might end up at 30L to 35L. Now what occupation will you get in Karur for this amount of money..EMIs I mean. So does it mean that this price is incorrect?
    In effect if a typical salary in Karur might be around 10K to 15K and a house costs 30L, then in Chennai with the typical salary around 2.5 to 3 times up price of a house in the edges of Chennai should work out to 80L to 100L (1C for those who hate the HECK of the C word!!). So people are forced to buy flats in Chennai which are available at 40L.
    Incidentally we have a flat right on the side of our house in Karur.
    So much of the HALLUCINATION of Wiseman and his bear coterie.
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  • Finally to add to the misery of Jadhavs and Whathehecks who may be not able to imagine the number of 0s in a crore. In Malleswaram in the heart of Bangalore (and Wiseman claims to live here!!), the guideline value is 4000psft. So if you own one of those old bungalows on a typical 50x80site u will sell for 1.6cr if u go by guideline. However the true value is around 15000-20000psft so it means 6c to 8c. Now my dear friends dont like such numbers so they will say who will buy it. Unfortunately there are buyers for flats near ITPL for 6cr. Go and check about TOtal Environment. THis builder is selling flats for 4cr to 9cr, really large apartments at around 6K to 7K psft and the area of the flat is 6000sqft. Now the fellow trying to buy a flat at 10L is certainly surprised by this Humungous figure but the truth is loss of 100 jobs for the fellow who can buy 10L flat or even creation of 100 jobs for such fellows dont make one dent for such projects. The buyers of those projects include Rahul Dravid.
    In other words, dont try to estimate who can buy 1C property. THey are not the LIG buyers who are talking about 10L and 20L flats. Such flats too exist dime a dozen in Bangalore but WE CANT USE THE SAME YARDSTICK for all people and properties. So in Saligramam the Vijays of Kollywood hike prices, in Seaward road the Ajiths do the same, in ITPL the Rahul Dravids do and I am told in Akkarai Madhavan does the same! A Sonia Agarwal not any hifi starlet tells that she needs 1lakh as pocket money for a month. Now the fellow who is crying for 10K loss once in a lifetime cant say that Sonia Agarwal does not exist or she is lying.
    So those of you who BELITTLE Crores are just crying out your INCOMPETENCE and no more. And Wiseman is wisely trying to run your adrenalin up.
    Now what is Wiseman upto. He is earning I suspect a decent sum maybe with a saving of 1L a month. So he wants to buy a bungalow in Adayar and so wants the price to come down to his affordability level. Now with a 1L EMI he might afford he can go for a 80L loan. Let us assume he has another 30L in his pocket his affordability is around 1.2C and even with other background etc might be 1.5C. With this he wants a house in Adayar. Having worked in Bangalore and being a Madrasi he wants Adayar as that might be the only place in his childhood. Today he wont get a house in Adayar. HIs buget has to be 3Cr, so his dream of a 50% fall will be shattered. Now he is selling his dream on this board and trying his best. This story holds good not just for Wiseman but for the hoard of NRIs. Now if Wiseman is clever he will try to get that house in a 1/2ground land in Porur. That is workable solution. Or he will pick up a 1300sft flat in Gandhinagar, an Appaswamy construction.
    Wiseman like folks want the cake and eat it too, so they want the price of Cake to fall to zero but well that is Hallucination.
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  • long messages

    Originally Posted by Natarajg007
    Finally to add to the misery of Jadhavs and Whathehecks who may be not able to imagine the number of 0s in a crore. In Malleswaram in the heart of Bangalore (and Wiseman claims to live here!!), the guideline value is 4000psft. So if you own one of those old bungalows on a typical 50x80site u will sell for 1.6cr if u go by guideline. However the true value is around 15000-20000psft so it means 6c to 8c. Now my dear friends dont like such numbers so they will say who will buy it. Unfortunately there are buyers for flats near ITPL for 6cr. Go and check about TOtal Environment. THis builder is selling flats for 4cr to 9cr, really large apartments at around 6K to 7K psft and the area of the flat is 6000sqft. Now the fellow trying to buy a flat at 10L is certainly surprised by this Humungous figure but the truth is loss of 100 jobs for the fellow who can buy 10L flat or even creation of 100 jobs for such fellows dont make one dent for such projects. The buyers of those projects include Rahul Dravid.
    In other words, dont try to estimate who can buy 1C property. THey are not the LIG buyers who are talking about 10L and 20L flats. Such flats too exist dime a dozen in Bangalore but WE CANT USE THE SAME YARDSTICK for all people and properties. So in Saligramam the Vijays of Kollywood hike prices, in Seaward road the Ajiths do the same, in ITPL the Rahul Dravids do and I am told in Akkarai Madhavan does the same! A Sonia Agarwal not any hifi starlet tells that she needs 1lakh as pocket money for a month. Now the fellow who is crying for 10K loss once in a lifetime cant say that Sonia Agarwal does not exist or she is lying.
    So those of you who BELITTLE Crores are just crying out your INCOMPETENCE and no more. And Wiseman is wisely trying to run your adrenalin up.
    Now what is Wiseman upto. He is earning I suspect a decent sum maybe with a saving of 1L a month. So he wants to buy a bungalow in Adayar and so wants the price to come down to his affordability level. Now with a 1L EMI he might afford he can go for a 80L loan. Let us assume he has another 30L in his pocket his affordability is around 1.2C and even with other background etc might be 1.5C. With this he wants a house in Adayar. Having worked in Bangalore and being a Madrasi he wants Adayar as that might be the only place in his childhood. Today he wont get a house in Adayar. HIs buget has to be 3Cr, so his dream of a 50% fall will be shattered. Now he is selling his dream on this board and trying his best. This story holds good not just for Wiseman but for the hoard of NRIs. Now if Wiseman is clever he will try to get that house in a 1/2ground land in Porur. That is workable solution. Or he will pick up a 1300sft flat in Gandhinagar, an Appaswamy construction.
    Wiseman like folks want the cake and eat it too, so they want the price of Cake to fall to zero but well that is Hallucination.


    Dear natarajg007,

    Oh! 3 pretty long messages? You did find such long time to type? Though at some places, wiseman is being dragged, which I did not relish that much, it is really nice to read your messages otherwise from a different tangential thinking. Kudos to you both natarajg007 & wiseman, who make this forum very lively. Best Wishes.

    ks2071746
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  • 1. Out of the 3600 sq ft constructable area, do the builders usually charge for the whole area or just the constructed area leaving the free space?
    2. Shocking to hear that an independant house in Karur is going for 35L. I am not sure of the prevailing prices though.
    3. Bangalore stories are horrifying! Awestruck
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  • 1. Out of the 3600 sq ft constructable area, do the builders usually charge for the whole area or just the constructed area leaving the free space?
    2. Shocking to hear that an independant house in Karur is going for 35L. I am not sure of the prevailing prices though.
    3. Bangalore stories are horrifying! Awestruck.
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  • Add to this a fourth message now. So much for the ones who expect price collapse. Orange Properties whose advt even a Madrasi would not have missed is talking about a location that is 6km beyond Devanahalli airport in Bangalore. So it is like buying in Vayalur on ECR. So same price. However you ask for the Villa option and it works to 49L if you knock out the Benz car for 1050sqft land and 1600sqft building. Let us assume the best of construction (I doubt it too!) and give it 1500psft to construct. So 1600x1500=24L for building. So it means 25L for 1050sqft land or about 2500 per sqft land in a place as desolate as 6km beyond Devanahalli and that puts Marg security in Vayalur to shame. So which one of these is conning with the best advt is the best guess.
    However looking at it sensibly, one sees that prices of property in these god forsaken places have not fallen, just been repositioned by sexy advertisements. So Wiseman will have to really come up with a sexy advt to get the market to fall, otherwise as Deccan Herald says 2009 might see a rise in property prices. So if you are selling out your property dont come back and cry on this board. Jadhavs and Whatheheck cry because they did not buy when it was low, you will cry bigger if you sold out when it was high as u r losing an existing opportunity. And Wiseman as I said is not going to get his Adayar dream house unless he changes his budget by 2 times today and maybe 4 times in a year!
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  • ks2071746, seems to have problem with looong messages...

    Try to put the messages(long posts) of wiseman or nataraj's, into a very short paragraph and let us know, how to write short sentences.
    That para should convey everything what author intended to convey.
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  • Natarajg007, nice calculations..

    I agree in the high products, not only RE, in all products. There is no recession. People like Tendu, dravid wont feel recession.

    Let us come down to middle income level. Let us know in the interiors of Marathalli area in bangalore, where there are no proper roads, street lights and no water connection(builder gives borewell, which runs for max 5 years).
    The flats are rated 60 lacs and above, what is your opinion about this?
    is that a fare price?
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  • nataraj, nice calculations...
    I am still confused in this FSI thingy

    I agree in the high products, not only RE, in all products. There is no recession. People like Tendu, dravid wont feel recession.

    Let us come down to middle income level. Let us know in the interiors of Marathalli area in bangalore, where there are no proper roads, street lights and no water connection(builder gives borewell, which runs for max 5 years).
    The flats are rated 60 lacs and above, what is your opinion about this?
    is that a fare price?
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  • To people who says, RE boom is not because of IT/ITES and BPO (atleast in Bangalore),
    I have few questions:

    1) Why are the builders crowded near the IT hub and SEZ's?
    2) Why RE takes hit whenever IT industry slumps?
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  • Originally Posted by gone_mad
    1. Out of the 3600 sq ft constructable area, do the builders usually charge for the whole area or just the constructed area leaving the free space?
    2. Shocking to hear that an independant house in Karur is going for 35L. I am not sure of the prevailing prices though.
    3. Bangalore stories are horrifying! Awestruck.

    Did not get 1.? Builders will construct minimum 3600sqft in 2400sqft land. That does not include staircases, lift etc,...refer to CMDA rules. Now they will add all these common areas also and create a value say 4000sqft or more and charge for that whole sum. If a builder does what you seem to ask he will go bankrupt!! LOL!
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  • Originally Posted by vinayprabhu81
    ks2071746, seems to have problem with looong messages...

    Try to put the messages(long posts) of wiseman or nataraj's, into a very short paragraph and let us know, how to write short sentences.
    That para should convey everything what author intended to convey.

    You seem to have hit KS on his crotch! I hope KS is not hurt! LOL!
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  • Originally Posted by vinayprabhu81
    Natarajg007, nice calculations..

    I agree in the high products, not only RE, in all products. There is no recession. People like Tendu, dravid wont feel recession.

    Let us come down to middle income level. Let us know in the interiors of Marathalli area in bangalore, where there are no proper roads, street lights and no water connection(builder gives borewell, which runs for max 5 years).
    The flats are rated 60 lacs and above, what is your opinion about this?
    is that a fare price?

    60Lacs in Marathahalli. I think your data is wrong. Are you talking about Purvankara or Rohan vasantha. They have decent roads? Now in Bangalore I can get you a 2bedroom flat in Mallespalya for 25L, why bother about Marathahalli.
    So appreciate if you are specific about size and rate. BTW I can with a little effort get you a 2bed flat in INdiranagar or Malleswaram for 60L, again I repeat with a little effort, not off the track.
    Bangalore flats are almost half the price of similar flats in Chennai since FSI in Bangalore can be operated to the builders choice. In Malleshpalya some flats have FSI as high as 5! That too in probably 1ground land. Dont believe it?
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  • Originally Posted by vinayprabhu81
    To people who says, RE boom is not because of IT/ITES and BPO (atleast in Bangalore),
    I have few questions:

    1) Why are the builders crowded near the IT hub and SEZ's?
    2) Why RE takes hit whenever IT industry slumps?

    You seem have good questions but they dont answer the truth!
    1. Flat builders appear near IT companies and SEZ. Right. However that means that RE as you define is purely flats and that too at remote locations. That unfortunately is not RE. So while in your Bangalore Malleswaram has no IT company worth mentioning price of land there is one of the highest. Tell me why. There are no IT companies in Mylapore, T.Nagar yet it is they are some of the costliest locations. Dont tell me one Satyam that juts out of Chamiers road!!
    2. IT slump and Realestate Companies slump are related. That is because DLF can con only idiotic IT guys. Brigade can sell shit only to IT idiots. However land price has nothing to do with these as I illustrated in 1. So if you want to talk like Wiseman likening price of DLF or Unitech shares with RE then you are mistaken.
    Hope I answered your interesting questions.
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  • Originally Posted by Natarajg007
    60Lacs in Marathahalli. I think your data is wrong. Are you talking about Purvankara or Rohan vasantha. They have decent roads? Now in Bangalore I can get you a 2bedroom flat in Mallespalya for 25L, why bother about Marathahalli.
    So appreciate if you are specific about size and rate. BTW I can with a little effort get you a 2bed flat in INdiranagar or Malleswaram for 60L, again I repeat with a little effort, not off the track.
    Bangalore flats are almost half the price of similar flats in Chennai since FSI in Bangalore can be operated to the builders choice. In Malleshpalya some flats have FSI as high as 5! That too in probably 1ground land. Dont believe it?


    Sorry for late reply, was busy...

    I was talking about marathhalli prices before airport got shifted.

    Even I got a deal for flat behind leela palace for 30lacs, but they had 300% deviation from approved plan. So I rejected.

    Regarding Purvankara and Rohan, in the entire Marathhalli ORR stretch, corporation doesn't provide water, but still builders takes BWSSB charges. Some of my friends are paying hefty amount for water related charges as they get water in tankers.

    In kaggadasapura/CVRaman Nagar I can get flat in the range of 20-25lacs, but what about the roads, night time ladies cant walk alone on those streets. Considering all those facts, the prices are still high as per my opinion.

    Correct me if I am wrong.
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