What is "fair" aka true competitive price of land aka price of land if hoarding drastically reduces . The he cost ALL land in city = cost of constructing roads, metro , gutter lines, water lines , electricity cables, all public utility and NO MORE .
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What would be "true" "competitive" price of land , in say a city like Mumbai or Delhi or Ahmedabad ? It would be more than cost of making road , cost of putting electricity cables
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Any rural area , which is far from city, with abundant water , the land price is Rs 400,000 per acre . 1 acre is 4000 sqmt . So Rs 400,000 for 4000 sqmt will make price Rs 100 per sqmt i.e. Rs 10 per sqft. This is basically food value i.e. amount of profit food grown on the land can generate.
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In Ahmedabad , prices in posh areas for vacant plot is Rs 500,000 per sqmt and in rundown areas in its Rs 50000 per sqmt .
In Mumbai / Delhi prices are much much higher.
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Some 60% land in Ahmedabad or any city can be used for residential / commercial / industrial i.e. non-public purpose. About 40%is needed for public purpose such as road, sewer lines, electricity cables, bus stations, water lines, water tanks, parks, ponds, govt offices etc.
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One reason why the price is high is hoarding. But lets say there is no hoarding. In that case, what will be the minimal price?
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Lets compare vacant rural land with abundant water supply with land in city. Ahmedabad is about 400 sqkm. Lets say there is another vacant land with water supply of 400 sqkm .
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Some 40% need to be converted to following public utlities
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1. Roads --- about 5% to 10% including footpaths, bus stations and metro. To get estimate on amount of surface area needed for roads, pls see map of MOST productive city in world --- New York City. Its about 10% space is occupied by roads including foothpaths.
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2. Water lines , sewer lines
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3. parks
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4, govt offices, public schools
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5. electricity cables, transformers, internet cables, phone cables
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Now whats the cost of building all this except (4) and (5) ?
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The roads cost Rs 4000 sqmt . And thats national highway quality road. A good quality street road will be Rs 2000 per sqmt
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IOW, we can take a plot of 400 sqkm , spend Rs 2000 per sqmt on some 15% of the land, and some Rs 1000 per sqmt on remaining 25% of the land, the rest 60% becomes usuable for commercial / residential / industrial purposes !!!
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So cost of making 60 sqmt land fit for urban use is = 15 * 4000 + 25 * 1000 = Rs 60000 + Rs 25000 = Rs 85000 .
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So cost of converting vacant plot into land fit for urban use = Rs 85000 / 60 < Rs 1300 per sqmt !!! plus cost of putting electricity / phone / internet cables and cost of making govt offices and public schools !!!
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IOW, true competitive price of urban land = cost of converting rural land into fit for urban use , cannot exceed Rs 1300 per sqmt plus costs of cables, transformers etc !!!
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Rest, is all scam !!! The rest is obtained because of hoarding, by controlling permissions to lay electricity / phone cables , permissions to make roads, increased price in contracts and so forth.
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No wonder why political offices, which control road contracts, road making maps, putting metro, putting bus services etc are so so "political". Because there is simply too much money made by converting raw land into fit for urban use, and then selling it for 20-50-70 times the price.
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