KellySun22
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Joined: 22 Jul 2008
Posts: 1
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 22 Jul, 2008 2:42 pm Post subject: Land: a precious resource in Kochi |
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A different situation exists with respect to land resources in Kochi. They are wanted for occupation, for use in production processes, and as a storehouse of wealth, an inflation-hedge and also for yielding an income. Therefore, like gold, the price of a landed resource in Kochi is not determined wholly by its yield or its use for a particular purpose, even though the yield is affected by the demand for it as an asset. This demand will depend heavily upon the price of substitute assets in the ‘asset market’.
As an example of such a substitute asset, consider the ordinary blue-chip share, such as Unilever. Such a share has actual current earnings, prospective earnings, and an inflation-hedge based largely on prospective earnings. People bid in the market for it largely in accordance with how they view its attributes compared with other assets, e.g. gilt-edged stock and other alternative blue-chip shares. Now, while the size of the earnings on a Unilever share is relevant, the important point is that such earnings are capitalized at the rate of yield, which is acceptable on a Unilever share when compared with the yields from other types of assets. If earnings double, but acceptable yield remains unchanged, the price of the share will double. However, if earnings remain unchanged, but ‘acceptable yield’ is halved, the price of the share will likewise double.
When considering the investment pattern of the investors and builder, for the leading Builders Kochi and its suburbs were seen to give more returns on investment than any other city in Kerala. Almost all the prominent builders in Kerala do own at least one real estate project in Kochi. The leading builders testify that the yield from just one real estate project in Kochi will be more than that from several other projects in other destinations. |
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