By Naveen Saini | 06.03.2017 10:09:57When you think of a typical home, you might think of its design, and you might even think of the quality of its finishes.
But that’s not the case for the average house.
A house can cost as little as Rs 1 lakh in Mumbai, or as much as Rs 2.5 crore in Delhi.
So, a single house is only worth a fraction of its value when compared to the total value of its properties.
This is because of land acquisition, the cost to acquire land and the cost for building a house.
The main factor that determines the value of a property is the land itself.
When the land is bought from the landowner, the price of land goes down.
But when the land has been sold for a large amount of money, the value goes up.
As per the latest data from the Central Land Information and Management System (CLINMS), the total amount of land acquired in 2016-17 is estimated to be Rs 12,732 crore, or 1.36 per cent of the total land area in the country.
This figure has been steadily increasing in recent years.
In comparison, the total acquisition of land in Maharashtra, as per the same data, is estimated at Rs 1,742 crore, which is a mere 0.15 per cent.
The same data also shows that in the last five years, land acquisition has been the most important factor in determining the value in a property.
Of the total acquisitions, land is acquired for an average of Rs 6,824 crore in 2016, while the acquisition of real estate is estimated for an investment of Rs 5,903 crore in the same period.
Of the land acquired, a majority of the acquisitions have been made for industrial and commercial purposes.
But in terms of residential properties, a lot of land is being acquired for commercial use.
For instance, the land acquisition in Mumbai is estimated as Rs 6.5 lakh crore, while in Delhi it is Rs 3.7 lakh crore.
The land acquisition and the acquisition for commercial uses account for the majority of land acquisitions in Mumbai.
In Delhi, the most expensive land acquisition is for industrial purposes, followed by commercial.
However, a significant number of land transactions are done for commercial purposes, with the most recent figures indicating that the average acquisition for industrial properties is around Rs 1 crore, and that for commercial property is around 2.8 lakh crore.(Reuters photo: Sandeep Srivastava)A house, on the other hand, is only valued when it is sold.
This means that even the average cost of land for a house is not as high as the value for it.
According to CLINMS, the average price of a residential property in Mumbai was Rs 10,638 crore in 2019, which represents a decrease of just 2.7 per cent from the previous year.
The price of commercial properties, however, increased by over 20 per cent in 2019 to Rs 5.5 billion.
The fact that a property owner is getting a premium for acquiring land is not surprising.
For the average buyer, it means that they are getting a much bigger premium for a property than the price that the seller will receive for the land.
This premium is because the land belongs to the seller, so they are not subject to any tax or assessment.
This is why, as many properties are built by a builder, land that has been purchased for the builder is exempt from property tax.
This, however is not the only reason why a property buyer is getting the premium.
There are many other factors that go into determining the price.
For instance, a property’s size, location, the location of a bank, the number of rooms and amenities and other factors can also affect the valuation of a real estate property.