How much does a decent apartment cost in Hyderabad?

What accounts for the difference in the cost of developing an apartment complex in 2 different areas?

• For example, in Alexandria, VA a 2-bedroom rents for $1,500/month + utilities.  45 minutes away in Triangle, VA a 2-bedroom rents for $750/month + utilities. Let's reasonably assume that the unit is identical.  The level of service provided to the tenant is identical.  All costs (non-one-time-capital costs) are also the same for each apartment complex.  All construction inputs/costs were identical as all suppliers were equal distance from each complex.  The difference being the cost of the land. Is the Alexandria apartment complex making 2x the amount of profit of the same same unit? Assuming the supply/demand scale equally for land and rental prices, the land for the Alexandria unit cost 2x.  However, considering that all other costs are constant, wouldn't the Alexandria complex get a return (relative to the Triangle complex) greater than 2x Besides being profit-minimizing, what would stop the Alexandria complex from developing an apartment complex and then charging under the $1,500/month going market rate?  In this example, we can assume excluding the land premium, the cost of the Alexandria complex is identical to the cost of the Triangle complex. In conclusion, true/false: Even though rental prices in Alexandria are 2x Triangle, the cost of the Alexandria complex is not 2x Triangle.  Assuming, land is 50% of the cost of a complex, the cost of Alexandria would be 1.5x Triangle.  Factoring in the rental price market, the profit margin being .5x higher than the Triangle complex.

• Answer:

  Although scarcity is a factor in marginal pricing, it is also what the average person is willing to spend. This is the market rent. Factors that influence market rent are: desirability of location, area amenities, transportation, taxation, legislation (rent-control vs. non rent-controlled areas), property laws and community groups. Although the first two points are self-explanatory, the rest are what I call "shadow influences." In many areas in the US, cities impose a rent tax of 3 to 5%. Rent control limits the amount of rent one can charge, even renewing tenants will not see raises in their rents during their tenure in an apartment. Property laws deal with safety, design and building of complexes. community groups can alter how landscaping and aesthetics of the building. Finally, are there transportation access points near an apartment complex. The more distance from an employer, the less desirable in many locations. All of the above will decide the market rent. Even if you leveled all the development and construction costs at 1:1 for both cities, the above will always be the key issue with looking at profit and cost calculations.