Downward and Upward Loading

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BASICSOFREALESTATES1 2

ganesh ji

Platinum MemberJoin date:16-01-14Posts:6765Like received: 0

BASICS OF REAL ESTATES 1 12/04/14 05:35 PM

FSI Index:The FSI Index is the index by which the total constructible area can be calculated. It is the index bywhich the land area is multiplied so as to get the constructible area. This index is fixed by the government body andvaries from area to area, such that the FSI Index near a prominent road will be significantly lower than the interiors.Also the FSI Index will be significantly higher in the case of a redevelopment project, as the builder has to build arehab area also. The government gives an additional FSI, since the builder has to recover costs of constructing rehabbuildings (Redevelopment FSI Index varies from 2.5 to 2.7). An example will help to understand the FSI Indexconcept better: Say land area is 100,000 sq.ft, and the FSI Index is 1.7, the constructible area can be calculated withthe equation:

C( Constructible area) = L(Land area) * F(FSI Index)

Thus from our example, we get a constructible area of 170,000 sq.ft.

Ready Reckoner Rate:The Ready Reckoner Area is the rate the Government body (MCGM in Mumbai Region)fixes for a particular region of the city. Valuation experts calculate the value taking into consideration the variousdevelopmental criterions of the specific region. No buyer can register a property for a lower rate than the readyreckoner rate for the region. If a builder has to purchase additional fungible FSI, itwill be available at 60 per cent,80 per cent and 100 per cent of the ready reckoner rates for residential, industrial and commercial premisesrespectively.

Fungible FSI:As per new DC Regulation, any area near/inside an apartment, not included in the carpet & whichcan be enclosed inside, for eg: flower bed area, dry area, passage etc has to be taken into consideration whilesubmitting approval plans, and these areas would be included in FSI. A builder can buy maximum of 35% area(incase of residential development) as fungible FSI by paying the ready reckoner rate of the region. Do note that this isover and above the total FSI consideration. Thus here the equation for the constructible area becomes as below:

C= L * (F+35%F)

Free of FSI: As per the new DC rules, the only areas that will not be considered inside FSI are Car Parking, Meterrooms, DG rooms, thus being free of FSI.

Carpet Area: As per new DC rules, any area inside the apartment, and adjoining it can be considered to be the carpetarea of the apartment, this would not include the common area, but will include internal areas such balconies, dryarea, etc & passage area to the apartment.

Saleable Area Concept:In conventional terms saleable area of an apartment includes the built up area (wallthickness + carpet area) & the common area of the floor in which the apartment is located, the common area can alsoinclude the common lobby & lift area as per the developers discretion .Thus giving rise to the equation:

S.A (Saleable Area) = B.A (Built-up Area) + C.A (Common Area)

The thumb rule used by most developers to obtain Saleable area is Carpet Area + 40 %(Carpet Area), This 40% iscalled the upward loading on Carpet Area.

FSI Efficiency:The FSI Efficiency is the index used by the builder so as to calculate efficient use of FSI in the plan.The more the FSI Efficiency, the more the returns from the project. FSI Efficiency can be equated as below:



FSI Efficiency = S.A (Saleable Area)/Carpet Area

New Development Control Rules:Under new DC Rules, announced by chief minister Prithviraj Chavan, in anynew construction the areas of balcony, flower beds, terraces, voids, niches, etc, will now be counted in the FSI givento the builder. Earlier these areas were not part of the FSI granted to the builder. To compensate for the loss of freeFSI areas, the government has allowed compensatory fungible FSI to the extent of 35% for residential developmentand 20% for industrial and commercial developments. Fungible FSI will be usable like any other FSI which can beused for making flower beds, voids, etc, or can be used for constructing bigger habitable areas. No premium will becharged for fungible FSI to be used for the rehabilitation component under redevelopment of cessed buildings.Builder would also be able to offer 25% more parking area.

Downward Loading:Downward loading percentage calculates what percent the carpet area is as compared to thesaleable area. It is given by the below equation:

D.L (Downward Loading) = ((S.A (Saleable Area) Carpet Area) / Saleable Area) * 100

Example:Saleable Area of an apartment is 1820 Sqft, and its Carpet Area is 1081 Sqft. Thus here the DownwardLoading or D.L will be calculated as = ((1820-1081)/1820) * 100, which gives us a downward loading of approx40%.

Upward Loading:Upward loading percentage calculates what percent the saleable area is as compared to the carpetarea. It is given by the below equation:

U.L (Upward Loading) = ((S.A (Saleable Area) Carpet Area) / Carpet Area) * 100

Example:Saleable Area of an apartment is 1820 Sqft, and its Carpet Area is 1081 Sqft. Thus here the UpwardLoading or U.L will be calculated as = ((1820-1081)/1081) * 100, which gives us an upward loading of approx 68%.

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ganesh ji



http://indianrealtyblog.wordpress.com/2012/06/20/definition-saleable-area/

Saleable Area Definition

How does adeveloperarrive at the saleable area for their apartments?

Its truly a magical figure for customers, since they are charged on the basis of the saleable figure. Most people thinkthat the architects decide upon on the saleable area, and there are also those who think that the builder just makes upthe saleable area without any consideration. Both the assumptions are not true. There is a definite scientific approachin arriving at the saleable number. Since this post would involve certain technicalities associated with the real estateindustry, I will request the novice to read my earlier posts before reading this one.

The Three definite methods are :-

Loading as per Market Standards:

The percentage of loading on the carpet by various developers in a specified locality is studied, & a proportionalamount is added into the carpet area to arrive at the saleable area. People who need more understanding on the basicsterminologies like loading, carpet etc can refer to my earlier post Basics of Real Estate. For e.g., say in a Metrocity like Mumbai or Bangalore, different areas would command different percentage of loading, localities likeAndheri in Mumbai & Indira Nagar in Bangalore would command an upward loading of around 50%-60% on thecarpet. Areas where land costs are steep are bound to attract more loading on the carpet, so that the builder makesprofit. Any prospective builder in this scenario would analyse the market offerings, and would reach a loading figurecomparable to the market & which is in sync with the market scenario.

Considering Entire Constructible Area:

In this scenario, The entire constructible area, including the common area(which includes entrance lobby, servicefloors, amenities, ducts, refuge floor etc) and the lobby areas(individual floor lobbies) are taken in, and the areas aredivided proportionally and added into the carpet area of each individual apartment. For eg, say a builder plans tobuild 10 floors, with 2 apartments per floor. One is a 2 BHK of carpet area 600 sqft, & the other is a 3 BHK withcarpet area of 800 sqft. Lets assume the individual lobby area per floor is 400 sqft, & the total common area of theentire building is 7000 sqft. Here the carpet area has to be added with a proportionate share of the common area &lobby area to arrive at the saleable figure.

Lobby Area(10 Floors) = 400 x 10 = 4000 Sqft

Total Carpet Area(10 Floors, assuming no refugee floor) = (800+600) x 10 = 14000 Sqft

Total Extra Area = Total Lobby Area + Total Common Area = 11000 Sqft

Now to find the proportionate share of individual apartments,



Saleable Area of 2 BHK = Carpet Area + ((Carpet Area/Total Carpet Area) x 100)% x Total Extra Area

~ 600 + ((600/14000) x 100)% x 11000) = 600 + 471 = 1071 Sqft

Adding Lobby Areas & 50% of Common Areas into the Carpet/Built-up

Here the methodology of option 2 will be considered, but while the entire lobby area will be taken, only 50% ofcommon area will be considered in the proportion.

Thus, Total Extra Area (as per the figures given earlier) = Total Lobby Area + 50% Total Common Area ~ 4000 +3500 = 7500

Now, this figure will be added proportionately as per the technique shown in the 2nd Method into the individualcarpet areas or built-up (Built up Area ~ carpet + wall thickness + (dry area if applicable)).


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ganesh ji



http://indianrealtyblog.wordpress.com/2012/07/05/floor-space-index-fsi-magical-number/

Floor Space Index (FSI): MagicalNumber

Floor space Index or FSI is truly a magical or golden number for developers across the world. Basically this indexdenotes how much a developer can build at a piece of land, thus naturally how big a developer can benefit from aparticular land parcel. For the novice in real estate, FSI is basically an index, which when multiplied with the landarea gives the total built up area that the developer is allowed to build in that particular area. The Floor Space Indexis dictated by the government through its authorised agencies. It varies from area to area, and is also transferablefrom one area to another. A developer who doesnt consume the whole of his FSI in one land parcel, can buildadditional area in another so as to compensate for it.

FSI in Mumbai: The Floor space index in mumbai varies depending on the development ensued upon. Generally anFSI of 1.5-1.6 is considered in the island city, and FSI of 1 in the suburbs. But for redevelopment, slumrehabilitation, making common recreational areas, construction low range apartments etc, the Government helpscompensate the builder by providing additional FSI, so that the developer can benefit out of rehabiliating oldconstructions, making more public usability areas etc. Developers can also buy an additional 35% of FSI by paying60% ready reckoner rates, so as to build dry areas, flower beds etc. To know more about ready reckoner rates, dorefer to my older post Basics of Indian Realty.

FSI in South India:The Floor space index is in the range of 1-2 depending on whether the area falls undermetropolitan authority or village/panchayat. Buildings near main roads generally get lesser FSI, and also those nearwater bodies, weak mountainous terrain etc.

FSI Example: Consider plot area to be 10000 Sq Ft, & FSI alloted for the area to be 1.5, The total areabuild ableissimply 1.5 x 10000 = 15000 Sq Ft.


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ganesh ji



http://indianrealtyblog.wordpress.com/2012/08/31/indian-real-estate-industry-terms/

Indian Real Estate IndustryTerms

The idea behind this article is to make the readers understand what each real estate abbreviation/technical termstands for. Many of you would have been perplexed when builders use terms such as OC, IOD etc. Find belowdescription of all major terms associated with the Real Estate Industry (mostly Mumbai region).

CC :-Commencement Certificate, i.e Permission to start the development

Developable Area :- The total area which we develop in each of our projects, including carpet area,common area,service and storage area, car parking and other open areas on which we may undertake any development

Efficiency Ratio:- It is the ratio of the Internal Floor Area and Saleable Area.For the portion of project that has



already been sold or leased, it is calculated on the basis of actual obligations of the respective owner or tenant. Forthe portion of project that has not been sold or leased, it is based on management estimates subject to various factors,such as prevailing market conditions, location of the project and efficiency ratios achieved in portions of the projectwhich have already been leased or sold.

FSI Floor Space Index :-Which means the quotient of the ratio of the combined gross floor area of all floors,excepting areas specifically exempted, to the total area of the plot

Internal Floor Area:- Internal floor area is fixed for our Completed projects. For Ongoing and Planned projects,internal floor area is determined on the basis of maximum FSI and assuming maximum TDRs that can be utilised inthe project (TDRs may not have been actually acquired by us at the time of this calculation).

IOA :- Intimation of Approval

IOD:- Intimation of Disapproval, a double negative document approving the building plans

LOI :- Letter of Intent, used to express intent to buy property

MCGM :- Municipal Corporation of Greater Mumbai

MHADA :- Maharashtra Housing Area Development Authority

NA Order :- Non Agricultural Order

OC :- Occupation Certificate

Occupancy Level :- The combined Saleable Area of the occupied units of a project as a percentage of the totalSaleable Area of the project available for lease

Saleable Area:- The part of the developable area related to economic interest in each property and for which therespective owner or tenant is obliged to pay or for which we estimate that respective owner or tenant will pay

SRA :- Slum Rehabilitation Authority

TDR :- Transferable Development Rights, which means, when in certain circumstances, the development potentialof land may be separated from the land itself and may be made available to the owner of the land in the form oftransferable development rights


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ganesh ji



http://indianrealtyblog.wordpress.com/2012/08/17/vaastu-shastra-for-apartments/

Vaastu Shastra forApartments

The word Vaastu is derived from the sanskrit word Vaas which means dwelling. The dwelling referred to that ofboth Man & God. Vaastu Shastra or in literal meaning The Science of Dwelling basically consists of rules ofplanning & construction of Residences based on the cardinal directions of North, East, West & South. Asiancivilizations in general always have had sciences to dictate their dwellings since homes were considered a sacredabode. Feng Shui in China developed 3000 years ago, almost at a similar time of the development of Vaastu Shastrain India.

The Cardinal Directions & its influencers are as given below



The North-East (NE) is assigned to Water :

Its the ideal place to have anything consisting of a water body, like a storage tank, even decorative aquariums &other water themed items.

The South-East (SE) is assigned to Fire :

Ones kitchen, pantry, furnace, or boiler should be here.

The North-West (NW) is assigned to Air :

One can have a guest-room bed room or a store for finished goods .

The South-West (SW) is assigned to Earth :

Being the most stable , this is the best place for the Master Bed Room.

The Centre is assigned to Space :

Have the least possible activity in this area. Keep as few items here as possible. If you have a small apartment, placea small coffee table.

The Cardinal Directions owe their powers due to various factors.

1) The East Direction:The East side belongs to the Lord Indra. The sun risesfrom the East & this direction isgiven the first position.The principal God of the East direction is Lord Indra. Itgives prosperity and wealth.

2) The West Direction:The West direction belongs to the Lord Varuna who hascontrol and power over the rainand water.

3) The North Direction:The principal God of this side is Kuber who hasincalculable stores of wealth andprosperity. This direction is considered to be very auspicious, with the Godsgiving happiness and prosperity.

4) The South Direction: Lord Yama is the principal god of this direction. The South direction is thus banned for allauspiciousfunctions.

5) The South East Direction:Agni (fire) is the principal God of this side.This direction is used for Hom Havan ( oblations byfire to a deity in a pit) The kitchen should always be in this direction.

6) The South -West Direction:Nairuti, a demoness is the authority of this direction. Therefore,it is banned for allauspicious functions. This direction should be filled with heavy unmovable goods. Pits, wells, septic tanks, waterstorage tank, toilets or bathroomsshould not be constructed in this direction. This is because water in thesedirections have the risk of getting contaminated by dark energy and thusprove harmfulto man.


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ganesh ji



http://indianrealtyblog.wordpress.com/2012/07/23/2080-scheme-know-more/

20:80 Scheme: KnowMore!

20:80 Scheme as some of you would have heard, is a scheme wherein a builder asks only for 20% of the total cost atthe time of booking, and the rest 80% is asked only after the project is constructed. Doesnt it sound great!. Manypeople would love to invest into these Angelic builders, who play fair. Well, Know the truth below:

It involves the builder factoring in the cost of pre-emi into their launch price. Say, a builder plans to launch a projectat 11,000 p.sqft. They would launch the same at 12,000 p.sqft , with discounts(ranging from 500 psft to 1000 psft)offered to clients who dont go ahead with the 20:80 scheme. This higher launch rate is basically factoring in thepre-emi that the builder will pay monthly to the bank on behalf of the customer. The bank basically charges a higherrate of interest, say 1.5% higher than the base rate (11.5% today for most banks) for the scheme towards thecustomers. Builder can tie up with the bank for a period of 12, 24 or 36 months, depending on the time ofpossession. The customer has to pay the balance within the term period or possession, whichever is earlier (Mostbuilders reveal this fact at a later stage), likewise the Builder will not get any other payment from the bank until theexpiry of the term period or possession whichever is earlier.

In the scenario of delay in possession by the builder, there are basically two options:1. The customer has the responsibility of paying the pre-emi to the bank until possession, if the term period stated bythe builder expires & he has not given possession.

2. The builder makes the customer compulsorily sign an ADF option with the bank if he/she wants to opt for 80/20,thus enabling the builder to get the entire 100% irrespective of the possession of the building.

Basically both the options are builder friendly.




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ganesh ji



http://indianrealtyblog.wordpress.com/2012/06/12/save-tax-indexation-method/

Save Tax: IndexationMethod

Found an article on indexation in the Wealth Issue of Economic times June,2012. Its a very interesting technique tosave on long term capital gain tax when you sell your property. Find Below how its done. Hope it helps!

Download COST INFLATION INDEX.

Source:Wealth, Economic Times June 2012.


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ganesh ji



S. N. Financial Year Cost Index

1 1981-82 1002 1982-83 1093 1983-84 1164 1984-85 1255 1985-86 1336 1986-87 1407 1987-88 1508 1988-89 1619 1989-90 17210 1990-91 18211 1991-92 19912 1992-93 22313 1993-94 24414 1994-95 259

15 1995-96 28116 1996-97 30517 1997-98 33118 1998-99 35119 1999-2000 389

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20 2000-01 40621 2001-02 42622 2002-03 44723 2003-04 46324 2004-05 48025 2005-06 49726 2006-07 51927 2007-08 55128 2008-09 58229 2009-10 63230 2010-11 71131 2011-12 785


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ganesh ji



http://indianrealtyblog.wordpress.com/2012/06/12/valuing-a-property-the-income-method/

Valuing a Property: The IncomeMethod

With Property Priceson an upward trend, its always difficult to assess whether you are paying the right price forthe property you intend to purchase. An easy method of valuing a property is go by what the market says, say youintend to purchase a 2 BHK apartment of 1000 sqft, and if a nearby property is selling at 9000 rs per sqft, then youdecipher a market price of +-9000 rs per sqft. But market valuations cant always give the right picture. If the areahas a larger percentage of real estate agents, the market pricing can be grossly inflated. The income method ofvaluation is a better way to value a property in this case. This is how it works.

Say the market price of a 2 BHK apartment in June, 2012 is Rs. 90,00,000/-(90 Lakhs). Calculate the propertyappreciation value in the area for past 10 years, lets say a conservative estimate turned out to be 50% up, if themarket conditions are favorable in the next 10 years, we can assume the same level of growth. So through theassumption, we can say that the property will appreciate to Rs. 1,35,00,000/- (1.35 Crores) by June, 2022. Considera discount of 9% annually on the property value.

SalePresent Value: 13500000/(1+0.09)10 which equals Rs. 57,20,338/-

Nows Lets take the income that can be generated by the property in five years. Lets assume that the apartment hasbeen given for rent, and gives a return of Rs. 300,000/-(3 Lakh) per annum, The Annual Maintenance & Other costsof the apartment is Rs.1,00,000/-(1 Lakh), So the present net income value is Rs.200,000/-. Assuming that theproperty is not sold for 10 years, the total income value becomes:

200000/(1.09)1 + 200000/(1.09)2 + .200000/(1.09)10 which equals Rs.13,07,189/- approx.

Thus Ideal present Value through Income Method will be = Sale P.V + Income P.V, which equals5720338+1307189 = Rs. 70,27,527/-


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ganesh ji


BASICS OF REAL ESTATES 10 13/04/14 12:32 AM

http://indianrealtyblog.wordpress.com/2012/08/31/indian-real-estate-industry-terms/

IndianRealEstateIndustryTermsThe idea behind this article is to make the readers understand what eachreal estate abbreviation/technical term standsfor. Many of you would have beenperplexed when builders use terms such as OC, IOD etc. Find below descriptionofall major terms associated with the RealEstate Industry (mostly Mumbai region).

CC :-Commencement Certificate, i.e Permission to start the development

Developable Area :- The total area which we develop in each of our projects,including carpet area,common area,service and storage area, car parking and other open areas onwhich we may undertake any development

Efficiency Ratio:- It is the ratio of the Internal Floor Area and SaleableArea.For the portion of project that hasalready been sold or leased, itis calculated on the basis of actual obligations of the respective owner ortenant. For theportion of project that has not been sold or leased, it isbased on management estimates subject to various factors,such as prevailing market conditions, location ofthe project and efficiency ratios achieved in portions of the projectwhichhave already been leased or sold.



FSI Floor Space Index:-Which means the quotient of the ratio of the combined gross floor area of allfloors,excepting areas specifically exempted, to the total area of the plot

Internal Floor Area:- Internal floor area is fixed for our Completedprojects. For Ongoing and Planned projects,internal floor area is determinedon the basis of maximum FSI and assuming maximum TDRs that can be utilisedinthe project (TDRs may not have been actually acquired by us at the time of thiscalculation).

IOA :- Intimation of Approval

IOD:- Intimation of Disapproval, a doublenegative document approving the building plans

LOI :- Letter of Intent,used to express intent to buy property

MCGM :- Municipal Corporation of Greater Mumbai

MHADA :- Maharashtra Housing Area Development Authority

NA Order :- Non Agricultural Order

OC :- Occupation Certificate

Occupancy Level :- The combined Saleable Area of the occupied units of aproject as a percentage of the totalSaleable Area of the project available forlease

Saleable Area:- The part of the developable area related to economicinterest in each property and for which therespective owner or tenant is obligedto pay or for which we estimate that respective owner or tenant will pay

SRA :- Slum Rehabilitation Authority

TDR :- Transferable Development Rights, which means, when in certaincircumstances, the development potential ofland may be separated from the landitself and may be made available to the owner of the land in the formoftransferable development rights


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