Still the profits are intact!First, let me give you a good news. Please, don't worry. Builders in Pune are not in trouble. Profit margins of real estate developers are still intact. Actually, profits are "pretty good", says Sumit Arora, Vice President-Strategic Planning and Business Development, DS Kulkarni Developers.
To put the profitability of the real estate industry in the right perspective, Sumit Arora explains,"Though the market is not as great as it used to be probably a year-and-half back but still the margins of the industry are probably higher than any other industry so far."
Land and Construction cost in Pune:According to Mr. Arora, average cost of construction is in the range of around Rs 900-1,000 depending upon the specifications and amenities one provides in Pune.
Land cost would be on an average say around Rs 250-300 per square feet on sellable basis.
Average selling (property) price in Pune is around Rs 2,500-2,800 per square feet. That is what Pune is selling for right now.
Builder's profit and further price reduction:Mr. Sumit Arora gives important explanation about land and construction costs he has quoted in the above statement. He tells you to add "finance cost" and "administrative costs" into land and construction costs. Conclusion is "all put together the (profit) margins (of the builder) is in the range of around 40% only.
About property price reduction, Mr. Arora says, "I don’t see any scope of further price coming down and I believe customers have also realized that because of which the demand has picked up in the last two months...."
Hearty congratulations to all Pune property buyers for the "realizations" about property price.
Thanks to MoneyControl for verbatim transcript of the exclusive interview on CNBC-TV18.
Related Stories:1) DSK Vasantotsav - May 9 & 10 - last 2 days left to book a ready possession flat at a discounted property rates in Hadapsar, Kondhwa & on Sinhagad Rd
2) DSK Vasantotsav - A daring effort for reducing real estate prices begins from today
3) DSK Vidyanagari, behind Pashankar Auto, Baner and DSK Janhavi, Bavdhan - last 2 days, 16TH & 17TH May, to get the benefit of launching property rate!
Can you see any scope for further price reduction in Pune real estate market?First let me confess that i am speechless. I admire Mr. Arora for making this statement on National Business Channel. It also proved why CNBC-TV18 is considered as one of the best business channel.
Though, i can't utter a word, you can share your views in the comments. You can take Mr. Arora's figures, and visit above blogs and check the property rates, to see the "scope" for property price reduction in Pune real estate market!
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