Land valuations: Has the summit been scaled?

Starting the panel discussion, Mohit Saraf, senior partner, Luthra & Luthra Law Offices, said, "First and foremost, one has to check the title report and FSI should be clear."

On the main topic of the debate, 'Land Valuations- Has the Summit Been Scaled?' William Rattazzi, CEO- residential townships of Emaar MGF, said that the answer is both yes as well as no.

Giving his views, Parry Singh, Director of Redfort Capital said that if land becomes more than 40 per cent, it’s high. He said that internationally the land cost is between 15-20 per cent and on the other hand in India, in cities like Mumbai and Delhi it is even up to 55 per cent.

Amlan Baijal, Director of Gold Resorts & Hotels, said that in India, people see it for payback period. He said that even hotel consultants believe that there appears to be an inconsistency in terms of prices and growth.

Giving his opinion, Ashish Jakhanwala, regional director of Accor, explained that steep prices are driving industry to go for higher category than to offer a mid-segment property. He said that when a hotelier pays a very high price for a land, he has to develop a five-star luxury hotel to get the return quickly. However, Singh explained that recession has always been there in the market and occurs almost every year.

Baijal described that the valuation of land has to be determined on the basis of returns it is expected to generate. In terms of feasibility, he describes that the hotels have to go into different segments to minimise the probability of expected losses.

Concluding the session, the panel unanimously explained that the government needs to comprehend the hurdle and develop a simpler model to acquire land so that it is easy for the industry to develop rooms, which are enormously in demand.