LAND FOR BUILDERS IN PATNA :- IS CONVERSION  PLAUSIBLE

"Conversion" is a local word in Patna real estate where Builders in Patna and landowners agree on a land development agreement between them. As per an agreed percentage or ratio the builder in Patna agrees to develop a residential or commercial project (as suitable according to location of Land) on land in Patna. After the construction is complete, the constructed area is divided as per the agreed percentage between the builder and landowner. Actually the division takes places when the map and design of project is complete. 

If there is land of 10 katthas (13610 sq.ft.) in Patna in an area were the land cost per kattha is Rs.60 lakhs per kattha. Let us assume that the road is only 20 feet wide, the minimum required to construct apartments in Patna. FAR (Floor area ratio) that will be obtained is minimum 2. It means a constructed area of (13610*2) 27220 sq.ft. Now anywhere in Patna where the land is costing 60 lakhs per kattha, residential flats will sell on an average price of Rs.5000/sq.ft. It means the project will fetch about 13.5 Crores. Remeber the landlord is free to hold or sell his share as per his discretion. Cost for builder falls to be about (27220*1500) 5 Crores.

Now in the above example if we assume that the sharing was at 50% each( this has become a standard practice almost in all of Patna real estate, it seems), the landowner and builder gets Rs 6.75 Crores assuming that both sold all the flats. In simple terms, gain for landlord is Rs.75 Lakhs (land cost was 6 crores) and gain for the builder in Patna is about Rs.1.75 Crores.

No prizes for making out that profits for builder in Patna is higher in the above case. To eradicate this discrepancy Patna real estate evolved a concept of " Non- Refundable" amount (popularly known as NON and prounced as NUN) to be paid by builders in Patna to landowners. This is an upfront payment that a builder makes to landowner before they sign on the dotted lines of "Land Development Agreement". The payment amount, terms and time period differs on case to case basis.

With new building bye-laws in place a minimum land size and width of road in front of land has been specified where an apartment can  be erected in Patna Muncipal Area. Now it makes it more challenging for builders in Patna to get land on conversion in Patna. Because of skewed supply of land it has increased the demand for "NUN" too.