Here are some mind boggling figures: A 622 sq ft flat in Khar a suburb of Bombay, almost but not quite as tony as Bandra, was just sold for USD 1.250 million equivalent. The rate sold was Rs.1.2 lakh per sq ft.
The calculation is: 622 x 120,000 ÷ 59.7 (to the USD) The current rate for a sq foot in Khar is Rs.40,000. Then why was Rs.120,000 paid instead of the going rate of 40,000 in this case? Simple. The building will be redeveloped (RD) on the basis of additional FSI alloted to it and that flatowner would have got three times the area he now has. Make the calculation and you will get the same $1.2 million we arrived at previously but with the new sq footage (622x3x40,000÷59.7=$1.250 million) So why is the buyer paying future redevelopment value today, before redevelopment? Simple again. He expects the rate to go up by the time RD is completed to much more than 40,000. That's the minor part. What he knows is that with bribes and such on the part of the redeveloper, the buyer will land up with as much as five times the sq footage instead of three. That's how the Bombay real estate game is played. The current prurchase nets the municipality Rs 32 lakhs in transfer fees. Realistically about 5 of that will be used for the city and the other 27 will be stuffed into pockets of municipal officers, politicians, political parties, police and extorting criminal gangs. This is one flat. Large parts of Bombay are being "redeveloped" with millions of flats involved. Any questions now on how people in Bombay are "loaded". All on the backs of flatbuyers who themselves have to be similarly loaded to afford such prices. Roland. Toronto. Sent from Samsung Mobile
