Roland Dürre
Thursday October 7th, 2010

S21 The Second – The Value of Real Estate Property

Being a (small-scale) real estate gambler, I am, also interested in projects such as S21. Of course, the reason for my interest has nothing to do with railways or democracy (although I love both).  🙂

Well, I did a calculation, trying to find out up from which sum such a project would be worth it for the common real estate gambler. And the result I got says it does not at all look good for investors:

The area of the city covered by the project is allegedly one square kilometre. According to simple arithmetic, that equals one million (1,000 multiplied by 1,000) square metres.

How much of it can I build on? I am afraid (now this is all from the perspective of the gambler) that, unfortunately, a whole lot of the new area to be acquired will have to be relinquished for infra structure (streets, bus stops, public buildings and facilities). Let us be optimistic and assume that around half of the total area, that is 500,000 square metres, can be economically utilized.

Another thing I have to take into consideration is the price per square metre. Well, I am not familiar with the prices for property in Stuttgart. But since I a) am generous and b) believe in inflation, I assume that you can count on 10,000 Euros per square metres in this area.

With these assumptions, I get a total profit from the sale of the newly acquired real estate property of 5 billion Euros (500,000 multiplied by 10,000 is 5 billion).

Well, considering the money I would have to provide up front, that would not be good enough for me. So my advice is:

Dear gamblers! Keep your hands off the project. It does not look good!

Except if someone else pays.…

Moo or baah! Sheep or cow!

(Translated by eG)

1 Kommentar zu “S21 The Second – The Value of Real Estate Property”

  1. Chris Wood (Thursday October 7th, 2010)

    I use main railway stations much less than Roland, rarely support the CDU, and am not a businessman. Yet I must support S21 against Roland. In a chat show last night, the arguments against it were very dubious. The supporters seemed to understand things much better. The main agreed deficit of the project was that it had not been sold to the public. The organisers had not realised that with growing direct democracy, such projects need advertising budgets, rather than letting experts make decisions. It also became clear that a major objective of many protestors is to get the CDU out of power in the Land, and also to discredit Merkel. The CDU has been in power in Baden-Württemberg for a long time, and seems to have done a reasonable job there.
    Roland ignores the value to the community of the 500,000 qm not to be sold. It seems reasonable to value this as highly as the rest of the area, making the whole project worth 10 billion. Surely there are also further benefits from putting rails underground.
    Roland severely criticises German industry and representative democracy. Yet they are the envy of the World, (in so far as the world takes notice of Germany).
    It may be that drastic measures are needed to cope with dwindling resources in the World, but demo-government will be even more wishy-washy than what we are used to.

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