(To find out how a bunch of stupid guys like ourselves got to that figure, read on. . .)
How much will it cost to construct, brother? In our professional lives as real estate dudes in the booming (Booming eh? - Rahul) real estate market of India, we confront this question everyday! Yes, everyday. From wherever we have come and joined hands at this slave driving organisation, we have different figures and benchmarks in our heads.
New: Read our 2015 update - How much will home building cost you?
Even in some of the top real estate builder companies of India, we have seen different estimates of construction costs by different people. The components of construction costs too vary from company to company and there is no Gold Standard as such for these costs! Surprising yet true, construction costs in India is something that everyone knows. Ask a layman and he will tell you that the building in front of you would have cost Rs. 1,000 per square foot to construct. It is easy. However, we tell you that this is the most vague term out there and there are no correct figures, to go by. So we did a little snooping around for answers the other day. We present our stupid report below;
Assumptions - What are we constructing. From when.
# Residential apartments building
# Ground plus seven (G+7) to Ground plus nine (G+9) in height
# Standard premium fits and finishes. (Not imported marble flooring et al but the nice stuff)
# All statutory building requirements fulfilled to the maximum
# Construction Starts - April 2013
# Construction Time - 30 Months
# Start to finish. As in from the site possession to key handover to owner.
# Pure construction costs. Approvals, legal, marketing and other costs are extra.
We made telephone calls to engineers, brokers, builders and some hardcore construction folks. We chose to call only those who were experienced, had proven deliveries backing what they were saying, and had worked across India. Of course, we are banking on close relationships with them as well, knowing that a stranger would not quite start babbling figures to us.
Facts - Construction costs in India
#Call 1. Mr. GSB
Bio: Almost 2 decades in the construction industry. Construction experience in multiple countries. Helped construct and deliver over 10 million Square feet of space in India.
Costs: Rs. 3000 per Square foot to construct the above. Rs. 3300 if there is a basement added. Keeping in mind that you are starting the process in April 2013, that is roughly what it will cost you by the time you finish, which he assumed would be end of 2015.
#Call 2. Mr. AH
Bio: 15 years of constructing residential buildings of all sizes, sorts and finishes. Experience of managing costs, procurement and all else as far as construction goes. Heads one of the leading residential brands of India.
Costs: Rs. 2500 per Square foot to construct the above specifications. Kept harping that premium finishes was a very vague term and that finishes could add immense costs to the entire amount. After much talking and zeroing in on specs, he gave us that figure. Okay we say.
#Call 3. Mr. AS
Bio: 10 years on the street as a real estate broker. Runs his own setup now with 5 side kicks and is handling 3 large projects on exclusive selling basis. Has been part of the concepts team for more than 10 large residential projects as the sales head.
Costs: Rs. 2000 per Square foot. Period. Builders love to give out escalated costs to show that profits are not as large as common knowledge. But if you start now, it will not cost you more than that, he affirms.
#Call 4. Mr. SC
Bio: Think tank with a salt and pepper receding hair line and all. A great tea lover. Has worked for the best construction houses in India and continues to work for one of those. Planned and delivered over 5 million Square feet of real estate including 2 satellite townships!
Costs: Rs. 2100 per Square foot is what it should cost if you start now. Thanks. *beep* *beep* line goes busy. So you know how absolutely sure he was about that.
#Call 5. Mr. SJ
Bio: A decade in real estate as the VC of a big real estate brand. Practically started the venture himself. Delivered many projects in the specs range we are talking of here. A knowledge hub for all things real estate. We turn to him for stuff such as this!
Costs: Rs. 1700 to 1800 per Square foot. Take it from the horse's mouth. Thanks SJ, we trust you.
The construction cost ranges now from Rs. 1700 to Rs. 3000 per square foot for constructing the above specifications. You cannot really average that out would probably just need to average that out and you dummy bias it a bit and come to the figure of Rs. 2300 a square foot. That is what you should assume as your construction cost while you churn out that excel or that quick fingertip calculation.
About the authorRahul Mishra is a real estate professional who started his life as a salesman, selling homes in the city of Kolkata since 2001. He worked pan India in real estate organisations like MMG Realty, Bengal Shrachi, The Phoenix Mills and The Space Group before helping co found Pillars with a single objective - To make real estate easy!
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We would love your comments on this one. If you have a figure in your mind and have something to say about that, please feel free to us the comments box below. We are listening. :)