Building Sand Castles in the Sky

Indiabulls_logoWell, that didn’t take long for Bombay real estate developers to go from building “affordable housing” to overpriced properties.  Back in March 2009, at the height of the financial crisis every real estate developer was talking about changing their business model and going after value for money projects.  Now it seems many are scraping that residential business model and back to building massive properties, case in point – Indiabulls Real Estate (IBREAL). They recently kicked off their advertising campaign for Sky, Sky Suite and Sky Forest, all 3 properties are located in Lower Parel.  According to a sales rep I spoke to at IBREAL, Sky is sold out and their managed residences at Sky Suite are 20% sold. Sky just came onto the market about 6 weeks back, so that is either an incredible sales effort or excellent marketing to say “you can’t buy, go away.”

The latest building to go on sale is Sky Forest. The marketing info talks about 10,000 to 22,000 sq/ft for either a duplex or triplex.  I called and asked about pricing, it starts at Rs. 20,000 a sq/ft plus Rs. 50 per floor rise and Rs. 1000 sq/ft for a Worli view. So the math for a 30th floor 10,000 sq/ft pad is:

Base price = Rs. 20,000
Floor rise @ Rs. 50 x 30 = Rs. 1,500
Worli view = Rs. 1,000
Total 22,500 x 10,000 = Rs. 22.5 CR (approx USD 4.7 million)

The kicker is that the 10,000 sq/ft is really super built-up area, whereas the livable carpet area is more like 4,430 sq/ft. Why such a hugh difference? That’s because of the crazy Bombay real estate math that includes things like the lobby and other common areas of a building and quoted as “super built-up”, exceptionally stupid I must say.

So the price is really more like Rs. 45,000 sq/ft or around USD 1,000 which is quite spendy.

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