The price of construction land is always 20% of the price of the future facility.
The price of construction land does not depend on the surface of the existing land, but primarily on the elite real estate address and the total purchase price of the future building.
The elite address is not Kozjak in Zagreb, nor Smokvica on the island of Brač, neither land in Gospić nor land on the hill above Opatija, nor any land somewhere.
It’s important to remember! Elite address is always the only elite address in any country in any city, and all other addresses are just addresses.
Let’s start by line with these assumptions that all begin with if.
If the building plot has a surface of 1,000m2 and the max construction on this plot is 500 m2 gross, the investor-builder will be able to sell only 400m2 of net surface, as the remaining 100 m2 that are not subject to sale of waste to external and internal walls, floors and staircases.
If the net selling price of a net object is 3,000 € / m2, then we can expect that the net surface of the 400 m2 building will be sold for a total of € 1,200,000.
Simple math 400m2 x 3.000 € = € 1,200,000 total.
Of the amount of 1,200,000 € is paid:
* approx. 1/5 prices for building land (240.000 €)
* approx. 1/5 for VAT (240.000 €)
* approx. 1/5 for projects, connections, demolition, lease, rental of machinery, workers (240.000 €)
* approx. 1/5 for building materials, for construction, installation, roofing, ceramics, parquet, fences, doors, up to sanitation, switches and latches (240,000 €)
* approx. 1/5 the price is the final earnings of the investor (240.00 €) that he had previously invested (960.000 €).
Therefore, our dear sellers with unrealistic prices of construction land, there are no stupid agencies, there are no stupid buyers, no stupid builders or stupid investors who are ready for your building plot of 1,000m2 where it is possible to build only 400m2 net, to pay off with amounting to € 1 million.
The only situation where your building land can be sold for 1,000,000 € is only then if the future object of 400m2 is at an elite address where it will be possible to sell it for 5,000,000 €.
Most sellers form the price as if they are selling land on an elite location in Venice, Monaco or Rome on the Piazza di Spagna, and in reality this is a plot in the no name street, in the middle of nothing.
Author: Mirjana Mikulić