Friday, April 18, 2008

BKC Land Sold for Rs 1270 Per Sq Ft?

Who says land in Mumbai is expensive?

Parsvnath Developers has been able to procure land in Bandra-Kurla Complex, measuring 30,820 sq m, in open tender for Rs 42 crore. The project is for development of a depot for BEST, Mumbai's local transport and electricity provider.

The project involves planning, design, construction and re-modeling a fully-equipped depot, staff housing and commercial offices. This is however not the point.

Let us calculate the cost of per sq land in BKC, which is sold by MMRDA, the Maharashtra government's arm for real estate development.

It works out to Rs 1270 per sq ft. This is the cost of land at which it has been acquired by a private developer, in Bandra-Kurla Complex, considered to be the hottest property in Mumbai. All the while, home buyers are asked to cough up Rs 30,000-50,000 per sq ft for buildings in this area. If this does not reek of some sort of connivance of government then what is?

These same developers want to build housing and commercial blocks on these lands, and sell them for exorbitant prices. Precisely why investment by real-estate fund manager, Saffron has valued the project at Rs 620 crore.

No harm in this, except that this is "organized butchering" of the 40% citizens who want to live legally in Mumbai. The balance 60% of Mumbai live in slums, and will be getting small rented apartments as compensation for their lands, which will be taken away and sold to builders at high prices, a la Dharavi.

Read the original BS story here

Posted by Eclectic Investor at 11:31 AM  

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IN PASSING

Consider how the crisis has unfolded over the past eighteen months. The proximate cause is to be found in the housing bubble or more exactly in the excesses of the subprime mortgage market. The longer a double-digit rise in house prices lasted, the more lax the lending practices became. In the end, people could borrow 100 percent of inflated house prices with no money down. Insiders referred to subprime loans as ninja loans—no income, no job, no questions asked. - George Soros in latest book


“When everything’s going up, there’s a feelgood factor and people tell each other how much their houses are going up at dinner parties,” says Professor Mark Stephens of York University’s Centre for Housing Policy. “Then the music stops, as it always does.”

“Last year, Japan was a more attractive market to put money in. If you look at the US, we can now get an internal rate of return of 25% there, so why would anyone want to come to India?” - a senior executive at an international financial services group, who did not wish to be named.

"Most people told us house prices never go down on a national level, and that there had never been a default of an investment-grade-rated mortgage bond, "Mortgage experts were too caught up." - John Paulson, trader, who bet against subprime market and made $15 billion.

The most puzzling are the real-estate projects of Parsvnath. Just have a look at the Pride Asia project near Chandigarh. They are asking almost US $300K-$350 K dollars for 2 bed room apartments. They have Villas in this project that costs more than US $1.5 million dollars. It is true that some people in India have that kind of money in India. However most of their wealth is black money and that can not be used to buy these properties. Obviously, these projects have been launched keeping NRIs in mind. - Sanjeev, comment from another site

Prachi Desai, aka Bani, the star of Balalji Telefilms's soap, Kasam Se, has been house hunting for over a year. She had almost closed a 2-BHK deal last year for Rs 1.5 crore in a Oberoi Constructions' building located at Andheri, Mumbai, but when she went back to confirm it, she was asked to cough up Rs 2.61 crore. Since then, she is still house hunting. - Mumbai Mirror

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