Speculative deals make up 50 percent of the land market

Publish date: 21-11-2007
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Most real estate developers are buying land fourth or fifth-hand, which increases the price of such pieces of land by as much as 19 times, according to analysts on the real estate market.

Some 50 percent of deals for lands whose original purpose was agricultural and was later changed to become urban property, on which houses can be built, are speculative, the analysts said.

"Large pieces of land are bought by investors who later divide these into smaller plots, which they later sell at higher prices. Or smaller pieces of land are bought and later sold as a single, large plot" to Real estate developers, according to consultancy company Regatta's Residential Projects Manager, Sorin Lacusta, for Business Standard.

"The value of a piece of land can rise as much as seven-eight times, before it is purchased by a developer. This is due to investors who do not trust the market and would rather buy at higher prices, from reputable intermediaries," says law firm Dinulescu and Maxim's Partner, Marius Maxim. He added a 1-3 percent tax is paid for each transaction, meaning the state has only to gain from such transactions. However, they agree that speculations are fewer and less widespread than two or three years ago, because land prices are no longer increasing as rapidly. The current annual rise is 15 percent.


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