Secreats of property markets.!
The manner in which property rates have soared by 400-500% in last 7 years is cause of concern for society.High property prices raise the cost of doing business and also cost of living thus raising inflation further.In this governments are also looting the country by raising property related several taxes and security deposits and they are also auctioning land instead of developing land and distributing it at low rates.Land bank is not being released by government agencies deliberately in connivance with property and builders mafia.A number of politicians and babus are involved in this business.
It is time that consumers or customers resist this plunder and loot and boycott property market till prices are pulled down to sensible level of at least 50% of current prices.Governments should also be pressurised to reduce stamp duties and various taxes and stop auctioning land.
True cost of property: Let us assume a builder buys land in a big town say even at very high Rs 50 lacs per acre. That comes to just Rs 1250 per sq yard even assuming small acre of just 4000 sq yards. Take 3 times the land value as 1/3rd construction only is done for best layouts.That comes to 3700 Rs /sq yard. Add Rs 1000/sq yard as external development charges and common facilities. That comes to Rs 4800 /sq yard. That means only Rs 533/sq ft. Now assume that a 5 storey apartment building is made. That means land cost is shared per apartment @ only Rs 106 per sq ft.
Now take Rs 900 /sq ft construction cost and another Rs 100/sq ft for common equipment like pumps and lifts. That comes to maximum Rs 1000/sq ft
Hence total cost of construction of any reasonably good residential complex works out to maximum Rs 1100/sq ft in a big city peripheral area. But builders are charging Rs 2300 to 2500 /sq ft of actual flat area ( they charge on super built area rates, always).This is more than 100% margin and sheer profiteering. And remember they give flats in unfinished form also without water and electricity connection thus saving further 200-300/sq ft cost.No builder completels assured facilities for people in their area even for years.The local authority also fails to provide development of road and water suply etc.
This is nothing but sheer loot and plunder by property and builder mafia along with sate governments and their departments. There is no accountability at all.It ios free for all going on.
If calculated fairly the apartments should not cost more than 1200-1400 /sq ft of super built area for best schemes in peripheral areas of big cities.Whereas the builders are charging Rs 1700 to 2500 per sq ft of super built area by adding some small value features.
Customers and Indian people should understand the way the loot and plunder is going on and boycott the property market till sense returns and builders mafia brings down rates to sensible levels.There is no need to panic. Those who have high incomes should not blindly invest money in highly overpriced assets and damage economy but save it for their future or give it to charity.That would atleast bring equitable development in country.
Hence Boycott property markets till sense restores in both built property and plots.Governments should be forced to stop acutioning of land.
Prof R K Gupta
www.rkgupta. in
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Shabbar Suterwala's Leaders Worksop "Key to Your Success"
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