Sunday, April 06, 2008

Buy Mumbai Flats on Carpet Area Only

Goodbye super built-up area. Long live transparency, if it can survive the first gasps of breath. Once again, despite some typical obfuscation, the Maharashtra government appears to be taking some steps to make home sales more transparent for the buyer.

On Monday, the Maharashtra Legislative Council will pass a bill, which will make it mandatory for builders to sell homes on a carpet area basis, rather than the ubiquitous measures called "built-up", "super built-up" and in some cases "super super built-up" areas. Things are so ludicrous that one contact in the building industry said that builders could soon be charging for floating particulate matter in the air around Mumbai.

For those who don't know, super built-up area is basically the area that is occupied by the lift, passages, balconies, ledges, parapets, terrace space etc, which builders claim as part of the apartment.

The tragedy of super built-up for the home buyer was that while these spaces are either part of design extensions or areas of common use, you pay the same rate for these non-utility or common use spaces, as for the living space within the home. There is no justification for charging a price of say Rs 5,000 per square feet, for the apartment, as well as for the passage outside.

The new bill will make things more transparent for the buyer, who usually cannot understand or argue against the super built-up component.

Although the new bill does make allowances for promoters to charge for common areas and special facilities in proportion to the carpet area, this in itself may not be a bad idea. Gymnasium, badminton court, tennis lawn, party room, etc., will henceforth not be charged as part of the apartment, but as charges for additional facilities.

No one expects prices to come down because of this new bill, but every home buyer can now expect a modicum of clarity.

1 Comment:

[P] [P] said...

BKC auction indicates realty slowdown
As per media reports, the Mumbai Metropolitan Region Development Authority (MMRDA) had recently put five plots on auctions in the G-Block of the Bandra-Kurla Complex, comprising two commercial, two residential and a clubhouse. Out of the these five plots, the authority only managed to sell three plots for Rs1,322 crore. Of these three plots, the authority sold one commercial plot, spanning 24,000 square metre, to Jet Airways for Rs826 crore. This implies a selling price of approximately Rs32,000 per square feet (Rs314,467 per square metre) for the commercial plot. This selling price is at a 31.7% discount to the Wadhwa Builders' bid of Rs46,806 per square feet (or Rs503,636 per square metre). It is also interesting to note that Jet Airways was the sole bider for this


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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

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.”

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.

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.

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

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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