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Practical Assessment of The Value of The Land You’d Like to Buy

Posted by Mare-mrn on 15/04/2023
Investment, Real Estate
0

An Assessment of the Value of the Land you will be buying

The Land

Let us say you are after buying a land plot however, you are unsure that the price is right. With this simple method, you could easily assess and find out whether you are buying the land at right price. This way, you would have the chance to avoid the deal if the price is too high.

Taking round numbers is always best however, let us look at the price of a land in Mersin which is currently advertised by MARE Investment.

https://mareinvestment.com.tr/properties/investment-land-in-central-mezitli-2/

This land is for sale for 14.000.000 TL and you can see it on Sahibinden.com as well. 

Its area is 1.120 sqm

Its zoning is residential E=0,90 and allows 8 floors.

Calculations

In Zoning Plans E represents the sellable area of a building and it is multiplied by the area of the plot, so let us do that.

1.120 sqm x 0,90 = 1.008,00 sqm – This is the net sellable area of your building. About 20% of open extensions such as a balcony is allowed to be counted in the sellable area, so let us add that to the total sellable area.

1.008 sqm x 1,20 = 1.209,60 sqm – This is the total sellable area of your building, however in Turkey developers divide the total construction area to the number of units to find the gross are of an apartment. So, let us add the common areas like a lobby, elevator space, a staircase etc.

1.209,60 sqm x 1,25 = 1.512,00 sqm – This is our total construction area (1.450-1.600)

A one-bedroom unit is about 55 sqm gross, and this gives us 27 one-bedroom units in total.

One-bedroom units cost about 17.500 TL/sqm to build and this size of a building would take about max 12 months to finish.

So, total construction cost is 25.704.000 TL

Land + building cost in total is 39.704.000 TL

In this area of Mezitli, and in this building in particular we will be able to sell 1+1 units from 2.100.000 to 2.700.000 so let us say 2.400.000 TL on average.

Total revenue will be 64.800.000 TL

This leaves a gross profit of 25.096.000 TL which is 63% profit on the total amount spent.

Let us say you are targeting a minimum 65% profit. Then, we need to buy this land at most for 13.568.727,27 TL. This shows the price is about right!

If you would like to discuss land investment in Mersin, please feel free to call us. We can look at this option or others, depending on your plans. 

 

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