Page 2: Buying property in India and financing a home purchase

By Rajkamal Rao 


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3. A visit to the sales office is always fun and brings back fond memories of the culture of the British Raj.  Sales people fuss over your every need.  Sir/Madam?  Tea?  Biscuits?  Sure you don't need another bottle of water? 
   
   If you can digest all that is presented to you, great.  Otherwise, it's best to bring home the fat brochure to pore over in detail at your kitchen table the following weekend.


4. Once you have chosen the floor plan, you need to choose which floor you want to live in.  Property values list higher the higher up you go.  It's a lot less noisy when you are 150 feet above the ground; you will have plenty fresh air and breeze to boot, items that are becoming scarce in modern India.  But the higher up you go, the more dependent you are upon the elevator.  If one elevator out of three is out of service (this happens fairly frequently) your rush hour starts the moment you lock your door to head out.


5. As we have mentioned earlier, property prices are always listed in INR per square foot.  This makes it easy to compare different properties.  It also masks the sticker shock of the flat when there is that inevitable price rise - it's a lot easier to stomach an increase of INR 100/sft than another tab of INR 2 Lakhs.
   
   To us, the use of the INR per square foot metric for flats is rather disingenuous.  [Use of this metric for single family homes or villas is fine].  After all, the developer pays for land just once.  Say the going price for a flat is quoted as INR 3,900 per SFT.  Even if he paid INR 1,950 per sft (about half of the flat's retail price), he gets to sell the same land 19 times over to owners in a 19-storey building.  Yes, construction costs money but most engineers tell us that they are a relatively small portion compared to the cost of land.  We have talked with developers who say that they acquire land for about 10% of the cost they quote in their brochures.  In the above example, about INR 390/sft.  So, profit margins are massive.

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