Friday, January 7, 2011

Real estate.. how it works?

I got a mail from Purvankara and I had time to put the maths so that others can make out how RE firms are looting us..
text extract of the colourful emailer sent to my inbox from one of the property websites (another intrusion of privacy !! even though I didnt ask for promo mailers)
Purva Skywood
Purvankara has launched a new project, Purva Skywood at Kudlu, Haralur off Sarjapur Road. Seven imposing towers that greet you from a distance. Thirteen acres of serenity that transport your senses to different world. 728 aesthetically designed 2,3 & 4 BHK apartments that range from 1285 sqft to 2382 sqft. Amenities that is straight out of a dream.

Purva Skywood at a Glance

* Location: Off SarjapurRd, Kudlu/Haralur, 4 kmsfrom ORR junction.
* Land Area: 13 acres (approx.) -728 units
* Floors: G+15, G+18 & G+20
* Type of Flats: 2, 3 & 4 Bedrooms
* Bank approval for home loans(expected): ICICI, HDFC, CITI, Axis, India Bulls, HSBC, Deutsche Postbank, LIC, SBI.

Size (sqft) Super Area (sqft) Rate (Rs./sqft) Basic Cost (Rs.)
2 BHK 1263 2920 36,87,960
2 BHK 1309 2920 38,22,280
3 BHK 1662 2920 48,53,040
3 BHK 1834 2920 53,55,280
4 BHK 2340 2920 68,32,800

Now, I was curious to know how these costing of these properties work. According to me, the computation part :
728 units * 1263 sqft (considering all units as 2BHK for computation purpose)*2920/ sqft
= Rs. 272,16,13,440 or in short 272 crores!!
cost of land : 13 acres in SarjapurRd, Kudlu/Haralur, 4 kmsfrom ORR junction would be around 5 crore/acre at the max = 65 crore
cost of construction @ rs.1,000 per sq ft
1263* 728 *0.7 (since carpet area is 70% of super area ) = 643642 sq ft.
643642 * 1000 = 64 crores..
additional costs = 10 crore (i know this is on higher end )
project execution cost = 2 crore
grand total = 141 crore..
considering a profit of 30% (which is again at higher end), the total project should hve been 141* 1.3 = 185 crore

but, they have jacked up the prices such that they would make a profit of atleast cool 150 crores on this project..
Earlier days, flats are cheaper and individual houses are costlier. Nowadays, there is not much difference between them. The cost of owning a flat in outskirts is 80% of owning an individual property in the residential area. Time for RE investors to ask for spilt up and ensure fair pricing is done..

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