GROWTH OF BUILDER APARTMENT ACTIVITY

CASE STUDY: NEW FRIENDS COLONY

INTRODUCTION New Friends colony is one of the posh colonies in south Delhi area; it is a co-operative plotted housing with plot sizes of 500 sq yard and 300 sq yard. Due to very high land value and high demand many bungalows has been redeveloped into apartments, this activity was first observed in late 80s and in recent time a lot of new apartment building activity has been observed in this colony. The location of these apartments is scattered but the concentration is more on the major access roads. LOCATION Pocket A Total No. of Plots = 298 Total No. of Plots with apartment construction = 25 8.3% of the total plots are converted to apartments

Pocket B Total No. of Plots = 274 Total No. of Plots with apartment construction = 36 12.5% of the total plots are converted to apartments 15 apartments i.e. 42% is under construction

Pocket C Total No. of Plots = 245 Total No. of Plots with apartment construction = 22 9% of the total plots are converted to apartments 16 apartments i.e. 73% is under construction

Pocket A have only 4.5% of plots with apartment while pocket B has 11.3% of plots with apartments, mthis explains that location with better accessibility is more likely for apartment construction.

PLOT AREA AND FAR There is an equal ratio of apartments on 500 sq yard plot and 300 sq yard plot. The plots which are of less than 250 sqm (less than 300 sq yard) have permissible FAR upto 300 and plots above 300 sq yard have a permissible FAR of 225. So to make maximum profit developers prefer smaller plot with flat area upto 2000sq ft, but the demand is of larger 2500sq ft 3500sq ft flats (with 225 FAR on 500 sq yard plots). This explains the reason why there is equal ratio of development on both the sizes of plots. However Builders have also purchased extra FAR to make larger flats.

COST OF DEVELOPMENT AND PRICE OF FLATS The Prices of flats in New Friends Colony varies from 3.5 Crore to 9.5 Crore. The smaller flats of 2000 sq ft have a price range of 3.5 Crore to 5 crore (Rs. 17,500/sq ft to Rs. 25,000/sq ft) and large flats of 2500 sq ft have a price range of 4.5 to 9.5 crore (Rs. 18,000/sq ft to Rs 38,000/sq ft). Three basic components of costs are, Land Cost, Structure Cost and Finishing Cost. Land Cost vary from Rs. 2,00,000 /sq yard to Rs. 5,00,000 /sq yard, it totally depends upon the location and accessibility, it has also been observed that land price of larger plots are more than smaller plots. The structure costs vary from Rs. 500 /sq ft to Rs 1500 /sq ft. Most of the apartments (70% 80%) have an average structure cost of Rs. 800 /sq ft. The Finishing cost vary from Rs. 2000 / sq ft to Rs 3500 /sq ft. All range of finishing is observed in different part of the colony; the smaller flats have comparatively lower finishing cost than larger flats. The Total cost of construction is approximately 60% - 70% of the selling price, and 40% - 30% is profit. The land is assembled in two forms, either the builder purchase the Land and earn the full profit or the land is in collaboration, with a share of profit + land cost to the land owner. The share of land owner is generally 10% - 20% of the flat selling price, rest 20% 30% of the selling price is the profit of builder. Duration of the project varies from 15 months to 24 months.

NATURE OF DEVELOPMENT (BASED ON AVERAGE COST) Plot Size Ground in sq ft Coverage Permissib le Ground Coverage Achieved FAR Permissible FAR Achieved (extra far of 3% on each floor with Compounded 5 lakhs total ) 229 Flat Area Land Cost (loby included, balcony not included) 2600 sq ft Structure Cost Finishing Cost Total Selling constructi Price on cost + land price Profit

4500 75% (500 sq 3375 Ya)

60% 75%

- 225 = 10,125 = 2531 X 4

20 Crore 1.4 Crore = @ (4 X 0.35) @ Rs.40,000 1400 /sq ft /sq ft

4.40 Crore 26 Crore = (4 X 1.10) @ 4000/sq ft

36 Crore 10 Crore = (8.5 X 4) +2

2700 75% (300 sq 2025 Ya)

75%

300 = 8,100 = 2025 X 4

309

2100 sq ft

11 Crore 1 Crore = (4 2.4 Crore = 14.4 @ X 0.26) @ (4 X 0.60) Crore Rs.40,000 1200/sq ft @ 3000 /sq /sq ft ft

21.4 7 Crore Crore = (5 X 4) + 1.4

PROFIT SHARE IN COLLABORATION (Upper End) Land Cost Total Construction Cost Total Selling Price (Floor Cost + floor) + Basement 6 Crore 36 Crore 6 Crore = (1.5 X 4) + 0.2 6 Crore = (1.5 X 4) + 0.2 6 Crore = (1.5 X 4) + 0.2 36 Crore = (8.5 X 4) + 2 36 Crore = (8.5 X 4) + 2 36 Crore = (8.5 X 4) + 2 Profit of Owner (Flat price + Profit of Builder (after Basement) + (cash X floors) subtracting Construction Cost) 10 Crore 24 Crore = (8.5 + 2) + (4.5 X 3) 25 crore = (17 + 2) + (3 X 2) 27.5 Crore = (25.5 + 2) 6 Crore 5 Crore 2.5 Crore

OUT PURCHASE COLLABORATION

20 Crore

Apartment + Basement + Cash 2 Apartment + Basement + Cash 3 Apartment + Basement

PROFIT SHARE IN COLLABORATION (Lower End) Land Cost Total Construction Cost Total Selling Price (Floor Price Profit of Owner (Flat price + Profit of Builder (Floor Cost X floor) + X floor) + basement Basement) + (cash X floors) Basement 3.4 Crore 21.4 Crore 7 Crore 3.4 Crore = (0.8 X 4) + 0.2 3.4 Crore = (0.8 X 4) + 0.2 3.4 Crore = (0.8 X 4) + 0.2 21.4 Crore = (5 X 4) + 1.4 21.4 Crore = (5 X 4) + 1.4 21.4 Crore = (5 X 4) + 1.4 13.5 Crore = (5 + 1.4) + (2 X 3) 13.5 Crore = (10 + 1.4) + (1 X 2) 16.5 crore = (15 + 1.4) 4.5 Crore 4.5 Crore 1.5 Crore

Out Purchase Collaboration

11 Crore

Apartment + Basement + Cash 2 Apartment + Basement + Cash 3 Apartment + Basement + Cash