Budget Homes

Submitted by guna on Tue, 2010-06-29 09:18. Analysis | Pricing | Realty

What will be the resale value of emerging Budget Flats?

Can budget flats can compete with the traditional two bedroom, three bedroom, villas, duplex houses and independent houses?

A single bedroom flat is sold for Rs.4.5 crores in mumbai

It can not par with them as short term return. But it has tremendous scope in long run. After 20 years or more. When Redevelopment phase begins in your area, your single bedroom or double bedroom budget flat can easily compete with the resale value of traditional homes.

This is because the building value is depreciating and land value is appreciating. After 20 years from now both the building value of budget flats and traditional flats will be nill. But the land value where they are constructed may be in astronomical place.

Price of per sqft will be same for both budget flat owners and traditional flat owners. If the home is independent or semi-independent or one store or double store building, property owner will have more share than multi-story building like 10 floors or so.

Hold your breath. A single bedroom flat is sold for Rs.4.5 crores in mumbai for a redevelopment project.

Source: http://economictimes.indiatimes.com/articleshow/6077053.cm

It is because, price of an acre in Khar Society, where the flat were sold is Rs.200 crore now. Assume if fifty homes in one acre. To buy the one acre land, 50 houses(old) have to be bought. Which means the land covered by the 50 houses can be bought by buying the houses. So each owner get his share of 4 crore. He is not selling his house, he is selling the land where his house is built.