It is the rising price
of land in Patna that keeps the price of real estate in Patna always increasing
because the land price is the most important price factor in the real estate
price in Patna. But at the same time land prices in Patna are also dependent or
better say partially dependent on real estate developments in Patna. With
rising real estate developments the land prices too head northwards. This very
symbiotic relationship between land prices in Patna and development in Patna real estate is major cause of real estate bubbles in Patna. Yes, it is
interesting to decipher whether it is high prices of houses in Patna that makes
the land prices in Patna higher or is it high land prices that makes buying a house in Patna exorbitant.
of land in Patna that keeps the price of real estate in Patna always increasing
because the land price is the most important price factor in the real estate
price in Patna. But at the same time land prices in Patna are also dependent or
better say partially dependent on real estate developments in Patna. With
rising real estate developments the land prices too head northwards. This very
symbiotic relationship between land prices in Patna and development in Patna real estate is major cause of real estate bubbles in Patna. Yes, it is
interesting to decipher whether it is high prices of houses in Patna that makes
the land prices in Patna higher or is it high land prices that makes buying a house in Patna exorbitant.
The price of property
in Patna is made of material cost, labour cost, intangibles like location &
brand, marketing and administration costs (for builders and developers in
Patna), registration & stamp duty cost, taxes, brokerages and THE LAND
COST. If we look at each component of real estate price in Patna; we
will find each of these have been increasing in our country.
in Patna is made of material cost, labour cost, intangibles like location &
brand, marketing and administration costs (for builders and developers in
Patna), registration & stamp duty cost, taxes, brokerages and THE LAND
COST. If we look at each component of real estate price in Patna; we
will find each of these have been increasing in our country.
Even in so called
developed countries the ratio of land price to real estate price vary from 30%
to 50%. In Patna, if we buy one kattha (1361 sq.ft) of land where we can build
our house immediately, it will cost us at least Rs.40 lakhs. So the land cost
per square feet comes to be Rs.2939/- If we construct a house of 2000 sq feet
on it ( we have taken two floors only because housing by-laws in Patna do not
permit for more than 2000 sq.ft constructed area in one kattha of land), 1000
in ground floor and 1000 in second floor; the construction cost will be around
Rs.1500 per sq.ft. Therefore, whereas the construction cost is Rs.1500/sq.ft
the land cost is Rs.2939/sq.ft in Patna. The ratio is almost double. Therefore,
if we calculate the land cost as percentage of total cost of real estate in Patna
it comes to 2939/(2939+1500)
equal to 66%. And therefore in Patna people say “If one is able to buy land in Patna then he will be able to build a house in Patna.” This
percentage is comparable to Singapore, South Korea and Japan. In Japan it
touches to 90% in some pockets. But in Beijing, China it is only 35%.
developed countries the ratio of land price to real estate price vary from 30%
to 50%. In Patna, if we buy one kattha (1361 sq.ft) of land where we can build
our house immediately, it will cost us at least Rs.40 lakhs. So the land cost
per square feet comes to be Rs.2939/- If we construct a house of 2000 sq feet
on it ( we have taken two floors only because housing by-laws in Patna do not
permit for more than 2000 sq.ft constructed area in one kattha of land), 1000
in ground floor and 1000 in second floor; the construction cost will be around
Rs.1500 per sq.ft. Therefore, whereas the construction cost is Rs.1500/sq.ft
the land cost is Rs.2939/sq.ft in Patna. The ratio is almost double. Therefore,
if we calculate the land cost as percentage of total cost of real estate in Patna
it comes to 2939/(2939+1500)
equal to 66%. And therefore in Patna people say “If one is able to buy land in Patna then he will be able to build a house in Patna.” This
percentage is comparable to Singapore, South Korea and Japan. In Japan it
touches to 90% in some pockets. But in Beijing, China it is only 35%.
So at almost 66% of the
total property price in Patna no doubt it is the land price that influence the
property rates in Patna the most. Though we have established land prices as
most important internal factor in a property price in Patna but “Consumption
Story “ in our state Bihar which is clocking double digit growth year on year
too spurs the demand and hikes prices of land in Patna. With increase in income
people in Patna can go for home loans and purchase property in Patna. So we do
not undermine the influence of interest rates and income on property prices as
well as land prices in Patna.