My interest to buy a piece of land at a low price with excellent prospects for appreciation in value in the near term (am I asking for the moon!!) took me to a place called Poondi in the outskirts of Chennai last weekend. Poondi, is famous for its resorvoir than for real estate.
Last Saturday's The Hindu Property Plus exclaimed of a farm land near (!) Chennai at Rs30 per sq.ft. Myself and my Brother in Law could not resist the temptation of becoming a farm land owners at a very cheap price and called the real estate agent to arrange for a free site visit. In Chennai, almost all real-estate agents provide you with free site visits in the comfort of a car.
We were supposed to be picked up at 2.30 PM in the afternoon to go to Poondi which according to the real estate agent is 60 kms away from Chennai. Nobody turned up till 2.45 PM and we called him to find out that he is finding difficult to get a cab from his office pool of cabs to take customers to various sites. Finally he arrived at 10 minutes to 4 PM. The real estate company's salesman came in a Tata Indica Car with one more customer already sitting pretty. Both of us got into the car and it became a fully-loaded Tata Indica Car of 5 persons!!!!
We went through Tiruvellore and re-kindled memories of the missed opportunities in 2005-06. We particularly remember a real estate project just in front of District Collector's selling at Rs175 per sq.ft. We went and saw the property and we had to say "no" because of the reason that the site is below the road level. Today the same property is selling at Rs600 per sq.ft.
Poondi village is 16 kms from Tiruvellore and it took us more than 40 minutes from Tiruvellore to wind through the narrow village roads before reaching the farm lands. The property is a Mango farm spread over 120 acres which is being split into sub-units and sold to prospective farm land owners. The cost per acre of a farm land at Rs30 per sq.ft comes to a staggering Rs13 lakhs. The property is a good 6 kms from the Poondi resorvoir and there is no human habitation to be seen in the vicinity. My BIL was not impressed with the property since there is no sign of any development happening in the near future and he felt that it is in the middle of nowhere. He has a very good sense of these real estate deals and I agreed to his judgement. We decided to look at some other property which fits into our scheme of things.
The property spread over 120 acres at ongoing rate of Rs13 lakhs works out to Rs15.60 crores. At what rate the land owner would have brought the 120 acres of land say 5 years ago? May be the entire plot of 120 acres would have cost him Rs1 crore?