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This, in turn, may be computed in two ways. First, we may consider the discounted present value of crops that can be grown on the land after subtracting costs of inputs other than land. The maximum value was about Rs. Second, again in Punjab, the rent for agricultural land varies between Rs.
At prices, this is equivalent to about Rs , This figure can now be compared to the figures in Table 1, which is for the period So, we have two estimates for the maximum fundamental value of land — Rs. Observe that these maximum fundamental values are very low compared to the prices of land in Table 1; the minimum price in Table 1 is Rs.
The fact that the fundamental value of land is low is consistent with the other fact that by and large farmers have low incomes that are derived from production of crops on land. Next, consider an international comparison. The ratios of price to construction cost of urban homes for metropolitan areas in the US in the year are as follows: Average is 1.
A high ratio indicates a high price of land. Now, Glaeser and Gyourko argue that these ratios for the US are quite high. However, the situation in India in this regard is much worse. The comparable ratios in India computed from Table 1 range from 2. Consider another international comparison. The price of agricultural land in several European countries is shown in Table 2 below.
These market prices are low as compared to the market price of agricultural land in India, where it can vary between Rs. The international comparison based on Table 2 uses market exchange rate.
The over-pricing in India is even sharper if we use purchasing power parity instead of market exchange rate. The cost of a home includes not just the cost of land but also other costs. Let us return to Table 1 and consider construction cost. If the market price of land is high, then indeed, high-rise construction is an optimal choice. However, if the market price is close to the fundamental value of land that is, low , then there would be, except in a few places, hardly any rationale for land-saving high-rise buildings for which the cost of construction is higher than in the case of ordinary single- or double-storeyed homes.
So, the estimate for the cost of construction at Rs. Even if other costs like the true cost of development and the true cost of marketing are considered, the substantive conclusions here will not change. Of course, there are also various transfers masquerading as economic costs in the pricing of real estate but these have to be ignored in computing the fundamental values.
Why does over-pricing of land happen? Is it necessarily a bubble? What can be done about it?
All these are interesting questions but these are outside the scope of this column; these are explored in Singh The Real Estate Regulation and Development Bill, , which the Parliament is considering at present, is focused on protecting home buyers who can afford to buy homes in the first place. Can a non agriculturist buy an agriculture land in karnataka? Depends on your definition of cheap.
We are looking for people who can predict the future, possibly better than experts can. Join Us at Scry. You must find cheapest of lands in the following kinds of areas - Land in the deepest of the interiors of States like Telangana, Andhra Pradesh, U. P, Rajasthan, Assam where only a single strip of road can be found. Land which have Struck with floods or famines or any natural calamity last year ultimately calamity struck land regains vitality but risk of calamities happening again remains Land in Naxal Affected Areas.
Indians can also buy cheap lands in Nepal and Bhutan. Barren Lands. Land near tribal villages. Answered Aug 7, How much land? Updated Oct 8, Related Questions Where can I buy agriculture land in Telangana? Is there a limit on how much agricultural land one can buy in India?
Wagholi is very close to the IT hub in Kharadi. Market price vs. Land acquisition: Zirakpur, Mohali S. As per law you cant buy it, but then you buy a agri land in another state not all states have that restriction and then buy the land in the start which has restriction. Any private mortgages against the property need to be settled before the deal is finalized and document registered.
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