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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  • Originally Posted by Natarajg007
    Actually you may be wrong. Flat prices are dictated by builders who are strong hands. Land prices are dictated by individuals and are mostly sold when there is a necessity. They are weak hands. SO the truth is builders are making a fortune. Infact my advice to many on this board is go and buy land from a owner along with a couple of your friends and then build a flat for yourself.


    woh woh my thoughts! am willing/going to do the same.
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  • Originally Posted by gone_mad
    was just curious abt Manikka and googled him...
    His linkedin profile shows this:

    Current
    Leader, UMTS SW Development at Alcatel-Lucent
    Education
    Carleton University

    Nope Manikka studied in some Queens univ or so in Canada, Ottawa. He is not even a Carlton product. ANd in TN he studied in Madras Univ, but that is generic. It can mean Guindy in which case it is respectable or in some goddamn college. That he wont say as I suspect he studied in some hut called a college in good old 1988-90s when the concept of these colleges first came in to being!
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  • Many folks in this forum with a bearish view are talking about American collapse in RE and that the same will happen in INdia. Might sound logical at first site but let us read our lessons from scratch in a mathematical view.
    Given below are the price of a specific land in 2003end in Chennai and its price in 2008 end. Similarly I have given the salary of a BRoking professional in this same period and also that of a SW engineer in CTS.
    2003 2008 Ratio
    Land price for 1 ground 25L 150L 6
    Broking professional salary p.a. 2L 11L 5.5
    CTS engineer salary p.a. 1.8L 9L 5

    These are data I have from a land for which I had offers, from a friend in Broking industry and a CTS employed relative. So these are not cooked up.

    Now let us assume that the wants of the bears are satisfied. LEt us assume PRice of land will crash let us say by 70% much to the pleasure of our biggest bears. It also means salary will crash by 70% or even more ON THE AVERAGE. Now unless salary crashes prices wont fall for sure since demand will exist by those whose jobs are yet there.

    So let me argue as a bear (I find it ludicrous though!). So the CTS engineer will get 2.7L and broking guy 4.5L and land will cost 45L. So let us assume you are owner of the land. Should you sell it now. The bears on this forum say YES. Suppose the bear call does happen then you can take out 150L and look rich after the crash. However if I did not sell out the property I owned! THen I WILL BE RELATIVELY AT THE SAME PURCHASE LEVEL as I was before since the buyer namely the CTS engg or the Broking employee will afford to buy only at that DIMINISHED PURCHASING POWER. So I wont be getting poor!
    Most land owners are retired or have not more than one piece of land.
    Suppose the bears are wrong and price went up say to 300L. Now you will be left only with 150L. Your CTS engg will get 18L and the Broking guy 30L assuming everything moves up together and ASSUMING AS OUR FUNNY BEARS FEEL THAT PRICES MOVED UP ONLY BECAUSE OF NEW AGE JOBS!
    So where will you retired guy get that 150L more?
    In effect if you are short of cash, sell your property. Do I need to tell u that, you know it. If not why will you play a game with the bears. So if u dont need money now and u did not sell out and indeed 70% drop in salaries happened and in RE, then everything ought to get cheaper too. So you will have a 70% deflation, (I cant imagine that...even Japan does not have it!). So in that case your pension may not diminish (govt walas) and bank interest might dip but unless it becomes -ve like Japan you can spend it out and then sell your property.
    In net all I am saying is RE is your FAMILY JEWEL. It is not a trading item. One famous bear on this board wants to sell out a 100 yr old property. Now ask him if in the 100 years were there no reasons to sell out? Or will the end of the world happen only in the next 10 years.
    HOnestly those who own WORTHWHILE lands should just hold on and if it had a house enjoy the rent.
    Now the other question is about Flat purchases. Now if indeed the bears are right you will be trapped. However dont you think that you never realised the rise in 2003 to 2009, so how sure are you to say it will fall for the next decade. Did the Wise bears tell you to buy in 2003?
    All I can tell flat buyers is if you have the potential to buy with or without loan and if you have the repayment capacity with loan and U NEED THE FLAT (necessary condition) then please do buy it whether it is bull or bear market. IF you dont need it and are buying flats you are always stupid whether bull or bear market. In the best cases I know of Chennai returns probably 5% return on investment. So buy a flat ONLY TO LIVE IN IT.
    And then why should I buy land. NOw one reason is to build a house so the argument is same as for a flat except that you dont own a BUILDER CONNED UDS, but the entire land share. ALso you can operate on the land to your taste. HOwever if you are an investor in Land then you are a speculator as anybody else. THe only advice I can tell u is from the past. Land prices have not crashed 70% in 1996 when there was a crash, even until 2002, not in the small falls in earlier eras. Land WHICH IS LIVEABLE is always useful. So it will go up giving higher returns than any other normal investment types including Nifty or Gold or anything else. I dont want to talk about specific stock since u may not know to identify it and if u did you dont need to read this anyway!
    Land does not give linear returns, it is kinky, but past experience of data I have on lands purchased in 1960, 1967,1979,1988 and 1996 have shown that uniformly they have given about CAGR of 20% to 30%. However I am not talking about some agricultural land in TIndivanam. I am talking about a Mylapore or a T Nagar in 1960s, a THiruvanmiyur or a Saligramam in the 70s-80s and a GST road or a ECR in the 90s. These were liveable when purchased and have developed fantastically over the years. So if u buy land say in Velachery today it has to go up without fail based on past, in URapakkam most likely but in Madurantakam or Sriperumbudur maybe. In Tindivanam or in Vayalur u r speculating and u will have to wait for 20 years minimum for that CAGR based on my past studies.
    In summary if the sky falls on my head like the Gauls say, then I cannot do anything with or without bears. However if I dont believe in imaginary comics and depend on past facts in a SCIENTIFIC EDUCATED VIEW then buying LAND TODAY is an ASSET, FLAT is a good investment to LIVE and a house is a good combination of both and to sell your LAND OR HOUSE is SPECULATION and most likely will be FOOLISHNESS unless u r a trader in the housing market in which case you dont need to ask me.
    Hope the above summarizes all one needs to know about RE. Specific queries can be answered but this one summary tells it all. I AINT FOOLISH TO ASK A FOOLISH AMERICAN NRI TO TELL ME WHAT THE FUTURE HOLDS FOR ME, FOR HE HIMSELF LEFT THIS SHORE ASSUMING HE KNEW THE SOLUTION AND IS STUCK IN A NEW LAND WITHOUT FRIENDS AND WITHOUT JOB BUT YET WILL LIKE TO TELL ME THAT MUD HAS NOT LITTERED HIS MOUSTACHE.
    Is there more to say?
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  • With the budget passed today, there will be no stimulus more for anything in India for next 4 months. Lots of weak hands will be squeezed to sell out their RE for pennies and then all of a sudden come August or October, the same squeezed RE will be quoted for fancy figures.
    Even Wiseman who has as agreed by Panther a set of dup ids to support his views is going to sell out his land for a song. He will then will be paying tax hopefully (rather hopelessly) and then see that he cant buy 50% of that same land for the remaining money and will write next year telling us a fresh story!
    Please realize one thing. Dubai jobs are gone and Indians are returning true. Global downturn - true. REcession true. Realestate falling - partially true. What is missed is, funny rises in the outskirts are in trouble, silly builders are in trouble, but valuable land is yet pricey and you are getting lesser and lesser of them.
    Please go and find a genuinely buyable piece of land in Adayar, Mylapore, TNagar for reasonable price (will say 12K psft) and then u really got a good deal.
    Incidentally in Bangalore where prices are supposedly falling, in the outskirts of Sanjay Nagar where an acquaintance has a flat at 25L for 1000plus sqft, he states current rate is 30L. Things aint really falling, just stabilising.
    Ofcourse the silly broker who sold land in Sriperumbudur some 10km from Rajiv gandhi memorial for 1000psft will now give u the same for 200psft or even for free!
    Take care if u have land. Dont end up as Idiot man. IT is better to have a simpler name than to call urself Wiseman and be a Foolishman in reality!
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  • Yes, because budget has not helped RE, prices will further fall.

    Poor FM can not do much
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  • Originally Posted by Nataraajg007
    Yes, because budget has not helped RE, prices will further fall.

    Poor FM can not do much


    Dear friend,
    If the PM and FM really wanted to do some thing good for the RE buyers, they could have done it to woo the voters. They missed a golden chance.

    ks2071746
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  • Why should they do RE black money marketters?

    Let them do for farmers
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  • Originally Posted by Nataraajg007
    Why should they do RE black money marketters?

    Let them do for farmers


    Dear friend,
    This what they have been doing even though most of the funds do not reach the poor farmers, but the richer ones.

    ks2071746:o
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  • Originally Posted by ks2071746
    Dear friend,
    This what they have been doing even though most of the funds do not reach the poor farmers, but the richer ones.

    ks2071746:o

    the rich and the powerfull own the country .liberty and rigths are limited only to sending pink chaddis.
    tehelka.telgi,satyam,bofors have &would all end up as good discussions where many of the protestors show their oratorical capabilities and novel (pink chaddis) protests,good only for tea time conversation.
    the netas and babus will keep ruling the country as long as our diversities and fanatiscm of religion.linguistic and regional issues keep us from uniting.
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  • Oops I thought I was talking about RE mathematics and we are talking Politicians black money statistics! LOL!
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  • Originally Posted by Natarajg007
    Oops I thought I was talking about RE mathematics and we are talking Politicians black money statistics! LOL!


    Dear friend,

    You know the subject starts with one theme and drifts to different ones and mostly does not come back to the original.

    ks2071746
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  • Incidentally I started a new thread where I explained Land Mathematics. BTW, in Saligramam where I have vested interest I have been seeing the price of FLATS going up and not down. Maybe one truth is that the FSI of these newer advertisements are more fairer than the older ones. So in the past they sold flats at 4800 psft with FSI of 2. Whereas now they have made the FSI to 1.67 (legally applicable) and rate at 5600psft. So much for the imaginary fall in RE. It is more that crooked builders as the one I discussed in my new thread try to make a killing because of LACK OF MATHEMATICS KNOWLEDGE OF THE LAND OWNER AND THE BUYER.
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  • IT looks like that in Chennai even with defaults happening prices of RE are only going up. The reason is because there are always many who missed the bus a couple of years ago and are flush with money.
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  • In chennai, mots of the ads are being repeated with no takers.

    The reason is simple. People are loosing jobs/promotions.increments.

    No cash.

    Hence naturally RE is collapsing
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  • Originally Posted by Nataraajg007
    In chennai, mots of the ads are being repeated with no takers.

    The reason is simple. People are loosing jobs/promotions.increments.

    No cash.

    Hence naturally RE is collapsing


    Dear friend,

    The Chennai RE is showing downtrend now. The collapse has not started and it may not collapse also, but will continue to show downtrend.

    ks2071746
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