In a recent exhibition held under the aegis of MCHI (Maharashtra Chamber of Housing Industry) at Thane, I happened to visit quite a few stalls.
One of the projects exhibited there was from Puranik Builders. The brochure listed a building named 'Houston' which has 2 BHK and 3BHK flats. The area for a 3BHK flat as mentioned in their brochure is 748 square feet carpet. The rate they are quoting is 4695/- per square feet with an escalation of 25 per floor.
When I called to check what was the saleable area (euphemism for super built up area, including all open spaces) they told me that the area was 1160 square feet.
So in effect you are paying 54,50,000 for a flat of carpet area of 748 square feet. That works out to a real rate of 7281/- per square feet. Given that the land cost (FSI in Thane) is around 2000/- and construction cost for tower around 1200/- the builder is making a clean profit of 30,00,000 per flat.
No wonder builders are holding on to their stock and not selling at reduced prices.
Current stock of unsold property in Bombay (Mumbai) stands at more than 1,00,000 units. Taking an average price of just 50,00,000 per flat, the total unsold stock now is worth 50,000 Crore. Th interest burden on builders calculated at just 1% per month (commercial loans are between 12 to 15% per annum) translates to an interest outgo of 500 Crores per month.
Update:
Like I wrote about the exhibition, Times of India carried a report on the failure of the exhibition to generate interest.
Read the article here
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