How is saleable area calculated? What is super builtup area?

You have come to a very important page of www.nripro.com. There are two main reasons why it is
absolutely important for buyers to understand areas and methods used to calculate saleable areas:
(a) Different interpretations of areas and different methods used for calculation of saleable area can
have more than 20% variation in total price tag and (b) Actual area that you get directly depends on
how saleable area is calculated.

After you are done reading this page, we strongly recommend you read another related page
at this link on our website that shows actual examples of typical construction cost in Pune, and
how much money builders make.

Carpet Area: Area between the walls. Carpet area must have permanent roof (slab) over it, at
normal height. Owner must get exclusive rights to use and resell the carpet area. Carpet area is
calculated by multiplying dimension of room, i.e. length x width. Total carpet area is calculated by
adding carpet areas of all rooms. Generally, in addition to all the rooms, varandas, passages, area
inside the main door (if not included in living room dimension), balconies are included in carpet area.
FSI is applicable to carpet area. Depending upon builder practice, carpet area may be 50% to 70% of
of saleable area. It is always good to find ratio of carpet area to the saleable area, higher the ratio,
better it is. This is just to give you idea of what you actually can use, in practice it is in interest of the
buyers to find out what is carpet area and then apply loading factor on it (and not do the other way,
i.e. should not arrive at carpet by applying loading factor to saleable area.

The example below will illustrate trick used by builders/developers, when they say you can find
carpet area by applying loading factor on the saleable area.
Saleable Area: 1200 sq ft
Loading Factor: 25% (or 1.25)

Wrong Method (favours seller):

Carpet Area: 1200 x (100-25)% = 1200 x 75% = 900 sq ft
If you apply 1.25 or 25% loading, saleable area should be 900 sq ft + 900 x 25% = 1125 sq ft
As you can see under this method builder is charging you for 1200 - 1125 = 75 sq ft more

Right Method (favours buyer):

Find carpet area first by measuring actual dimensions, and then apply loading factor
Saleable area = 900 sq ft + 900 x 25% = 1125 sq ft

Terrace: Open area without roof, attached to the main unit that buyer gets exclusive rights to use
and resell (with the main unit). Open areas with slab at least double the height of the floor are also
considered terrace area. FSI is not applicable to terrace areas.

Balcony: Open area with roof (slab at floor height), attached to the main unit that buyer has
exclusive rights to use and resell (with the main unit). Generally balcony area is added to total carpet
area. FSI is applicable to balconies.

Dry terrace or dry balcony: Area meant to dry clothes that buyer has exclusive rights to use and
resell (with main unit). If it has roof (slab) at normal height, it should be treated as balcony. If it does
not have roof (slab) at normal height, it should be treated as terrace.
Builtup Area: Carpet Area + area occupied by walls, doors of the unit. Generally builtup area is not
calculated separately, it is included into the loading factor.

Loading factor or loading or load: Loading factor is a number used for purpose of arriving at saleable
area. It is used to add constructed space not exclusively allocated to the buyer. Such area generally
includes shared areas such as lift/elevator area, staircases, clubhouse, gymnasium, amenities area,
etc. Loading factor 1.25 indicates that developer/builder is applying 25% on the carpet area. Some
builders, in addition to carpet area, include terrace and balcony areas while applying the loading
factor. If the project does not have lot of amenities, the loading factor should be small. In most cases
loading factor of 1.3 is more than sufficient. Loading factor also includes parking space (irrespective
of it is covered, open, stilt, sold separately or not).

Superbuiltup Area: Carpet area + terrace + balconies + areas occupied by walls + area occupied by
common/shared construction (e.g. lift, stairs, club house, etc). Generally builders use loading factor
on carpet area to arrive at superbuiltup area. For example, if carpet area is 500, and loading factor is
1.3, then superbuiltup area is 500 x 1.5 = 750.

Usable Area: This is relatively new term. Technically there is no difference between Usable Area and
Superbuiltup Area. Some builders use this term to justify higher loading factor, typically in Mumbai
where land cost is extremely high.

Saleable Area: Generally superbuiltup area is saleable area.

FSI: Floor Space Index. This is ratio of land to carpet area. Generally it is 1 for residential plots (much
less for agricultural land) For example, if FSI is 1, and land area is 3000 sq ft, then total carpet area
on that land cannot exceed 3000 x 1 = 3000 sq ft. It should be noted that FSI is not applicable to
terraces, balconies. Also, this definition is provided for your information, enforcement of FSI is taken
care of by local authorities, and buyer should not worry about it (unless there are allegations against
the builder of misusing FSI).

Methods used to calculate saleable area

Builders apply different models to arrive at saleable area. The methods used by builder can result
into as high as 20% to 25% increase in the effective rate. We will try to explain different methods
(not all of them) used by developers/builders and their relative impact on saleable area, total price,
and ratio of carpet to saleable area.

In the example below, it is assumed that the rate is Rs. 4000 per sq. ft, loading factor is 1.3, and it is
a 1BHK unit with the following dimensions:

Room or area Dimensions (ft) Area (sq ft)

Kitchen 8 x 10 80

Living room 10 x 15 150

Bathroom 4x7 28
Bedroom 12 x 10 120

Total Carpet Area (C) 402

Dry terrace 4x8 32

Terrace 10 x 13 130

Total terrace area (T) 162

The table below lists different methods/ variations (certainly not all the variations) of arriving at the
saleable area. Please note effect of each variation on saleable area, total price, carpet to saleable
area ratio, and effective carpet rate. Please also note that calculations done manually don't match
100% with calculations done by builders/architects because they use CAD software. However the
difference in two method should not be more than +/- 3%. Because of different methods and
variations, it is difficult to "reverse engineer" and find out what method builder has used. It will be
good to find out from the builder if terraces/balconies are charged at 50% of 100%, and is loading
factor applied on those, and what is the loading factor. Most builders don't answer these questions
in written material, and may not even bother to answer even if you ask. In that case only option for
you is try different variations as given below and "figure out".

Effectiv
Total e
Load Load Carpet
Terrac Calculati price, carpet
Carpet applie applied Saleabl to
Metho e ng Rs., rate,
charge d to to e area saleabl
d# charge saleable (rate x Rs.,
d at carpet terrace (sq ft) e area
d at area saleable (Total
? ? ratio
area) price/C
)

(C x 1.3)
23,04,24 69.78
1 100% Yes 33% No + (T x 576.06 5,732
0 %
33%)

(C x 1.3)
24,14,40 66.60
2 100% Yes 50% No + (T x 603.6 6,006
0 %
50%)

(C x 1.3)
+ (T x 25,11,60 64.02
3 100% Yes 50% Yes 627.9 6,248
50% x 0 %
1.3)
 (C x 1.3) 27,38,40 58.72
4 100% Yes 100% No 684.6 6,812
+T 0 %

(C + T) 29,32,80 54.83
5 100% Yes 100% Yes 733.2 7,296
1.3 0 %

Method #1 in above table is legal method (because it charges terrace at 33% of the area, that is
maximum allowed for terrace). Method #2 is widely used method.

Summary
a) Bigger saleable area does not mean bigger carpet area
b) Lower rate does not mean good deal because it can result into higher effective rate because of
loading factor, and the way terraces are charged (at 50% or 100% or at some other %), and if loading
factor is applied on top of terraces
c) Method used by builder can cause a big swing in the total price as demonstrated in the example
above
d) Lower loading % does not necessarily mean it is better deal, one needs to look into how it is
applied on terraces, gardens and other areas that are not included in FSI
e) Per square foot rate is meaningless and misleading if not looked in light of the other factors that
influence saleable area

======================================================

What is builder's margin? How much money builders make?

Typically builders would make anywhere between 200% to 300% margin, i.e. for every rupee
invested they will profit Rs. 2 to Rs. 3. The illustration below, builder is charging more than 3
times of their cost to end customer. Moral of the story is the margin is high. This would also
explain why generally they don't negotiate, because it takes less than third of their apartments to
break even, which they can easily do with help of investors and financial institution borrowing, and
borrowing from other sources. Managing cash-flow is key to success in construction business. That
is the reason builders rely heavily on investors and other sources, in addition to financial
institutions and banks.

A Desired carpet area, sq. ft. 1800

B Load factor to builder (what they charge end user is much higher) 1.2

C=AxB Superbuiltup area, sq. ft. 2160

D Construction cost PSF 1000

E=CxD Builder's total construction cost, Rs. 21,60,000

F Plot size, assumes builder uses 100% FSI, sq. ft. 1800

G Plot cost, PSF, Rs. 900

H=FxG Total plot cost, Rs. 16,20,000

I=E+H Total cost to builder, Rs. 37,80,000

J Load factor (charged to end customer) 1.4

J1 Terrace, sq. ft. 500

K = (A x J) Saleable area, sq.ft. (this is what you will pay for buying constructed
3020
+ J1 property in market)

L Market rate PSF, Rs. 4,000

M=KxL Market price, Rs. 1,20,80,000

N Parking spaces, 2 x Rs. 2,00,000 each 4,00,000

O=M+N Agreement value, Rs. 1,24,80,000

P Builder's total margin, Rs. 87,00,000

Q=I/K Builder PSF effective cost, Rs. 1,252

R=L-Q Builder's PSF margin, Rs. 2,748

S=R/Q Builder PSF margin, % 220%

What would it cost you to build your own bungalow?

The table below illustrates simple example of what if you bought plot and constructed your own
bungalow vs. bought same saleable area from builder (say apartment of same size).
A Desired carpet area, sq. ft. 1800

B Carpet to builtup ratio 1.15

C=AxB Builtup area, sq. ft. 2070

D Construction cost PSF*, Rs. 1,500

E=CxD Total construction cost, Rs. 31,05,000

F Plot size, sq. ft. 2500

G Plot cost, PSF**, Rs. 2,300

H=FxG Total plot cost, Rs. 57,50,000

I=E+H Total cost of bungalow***, Rs. 88,55,000

J Load factor**** 1.4

J1 Terrace, sq. ft., (no cost to you, doesn't cost extra to build terraces) 500

K = (A x J) Saleable area, sq.ft. (this is what you will pay for buying constructed
3020
+ J1 property in market)

L Market rate PSF, Rs. 4,000

M=KxL Market price, Rs. 1,20,80,000

N Parking spaces, 2 x Rs. 200000 each 4,00,000

O=M+N Agreement value, Rs. 1,24,80,000

P Difference, you save, Rs. 36,25,000

Q=I/K Your bunglow's effective PSF rate, Rs. 2,932

R=L-Q Your PSF savings, Rs. 1,068

S=R/Q Your savings % 27%

* You can assume this cost to be Rs. 1000 PSF if you are planning to manage construction on your
own. Rs. 1000 PSF would give you high quality construction. Most probably you will hire someone
else, i.e. you will hire professional construction firm Professional construction firm will not charge
you just the construction cost but will add their maring too. So your effective PSF construction cost
can be in the range of Rs. 1200 to Rs. 1800 PSF. For this illustration, we have assumed
construction cost + margin of the construction firm be Rs. 1500 PSF.

** Assumed plot is freehold NA and in proper gated community with basic facliities (drainage,
sewage, electricity, water supply, roads).

*** Your bungalow cost will be higher than this to account for electric meter charges, water meter
charges, legal fees, club membership charges, onetime maintenance charges, service tax. These
costs are not included in this illustrations because you will incurr those irrespective of you build
your bungalow or purchase apartment from builder. Actual amounts might vary, it is not material
for purpose of this illustration.

**** Loading factor is higher at 1.4 to account for the fact that builders typically charge about
50% to 100% of terraces, and sometimes include terraces in loading.

Conclusion:
If you were to build your own bungalow, savings comes from not having to pay for loading, not
having to pay for terraces. Not only you save, but can go for layout that you like, no compromise.
From the illustrations above and our experience and observations, we have the following
recommendation.

Constructing your own bungalow vs. buying apartment from builder key inputs for making this
decision
Doing the calculations given above on paper and actually doing construction are two significantly
different things. Obviously, construction is highly effort intensive and stressful activity. That is
because; people just wont get your ideas, your vision, and wont follow you. They wont follow
your schedule; they will find thousand excuses for not doing the work in time and charging you
more (and worst yet, there is no safe exit for you, you will feel trapped). This makes it highly
stressful and frustrating experience. So, word of caution, get into this venture only when you are
mentally prepared to handle the stress and frustration.
This is related to the above mentioned point, make sure you can be physically present while
preparations are in progress as well as while construction is done. Unless you have not only
someone who can trust, but also someone competent, and capable to deal with architects,
construction firm, local authorities and agencies, it is recommended not to venture for your own
construction. It is good idea to buy plot, keep it idle until you can spend time and be present on
site frequently or find someone as mentioned above.
Assuming you are gone past the above mentioned words of caution, next criteria would be carpet
area you are interested in. If you are looking for smaller carpet areas, say less than 1000 sq ft, it
is not advisable to go for your own plot and construct. You will be better off purchasing apartment
or row house in the market. If your net PSF rate for constructing bungalow is higher than what is
going rate in the market, it might not be worth going for your own plot and bungalow, more so if
the land is not freehold. If the land is freehold, it may still be worth, because you own the land and
have flexibility to reconstruct. The benefit is you own land and that is what appreciates more.
We recommend plot size in the range of 2000 to 2500 sq ft this is because carpet area is
directly proportionate to the plot size (FST=1), generally 2000 sq ft carpet area is more than
sufficient for a spacious bungalow. We dont recommend bigger sized plots because it just adds to
the cost of the land. Even if you buy 5000 sq ft plot, you are not going to use all FSI and construct
bungalow with 5000 sq ft of carpet area. In short, most of the times it will be waste to go for
bigger plots. It can be individual preference, because some do like bigger plots.

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Loading Factor in Apartments: What is it?

As a first time home buyer, you will encounter several terms used by a builder that can confuse you, such as
super built-up area and carpet area. While some of these terms are regularly used when buying and selling an
apartment, there are other terms which do not appear in common usage. However, these are as important as the
former and can be a deciding factor in your property purchase. Loading factor is one such term. Let us see what
it is and how it affects your apartment size.

What is loading factor?

In order to understand loading factor, we should understand two commonly used terms. They are carpet area and
super built-up area.

Carpet area: Carpet area is essentially the floor area you get inside your apartment for utilizing. In technical
terms, it is the total area available in your flat where carpet can be laid, excluding walls and utility ducts. Carpet
area includes space available in your living room, kitchen, bedroom, bathroom and other rooms. Some builders
tend to add the balcony in this carpet area while others dont.

Super built-up area: The super built-up area includes the total built-up area of the flat including the carpet area
and walls, as well as common areas such as lift, lobby, staircase, gym, clubhouse, community centre and other
amenities. It also includes open areas such as terrace, play areas and gardens in proportion to the unit.

Loading factor: Loading factor essentially creates a relationship between the super built-up area and the carpet
area. It is the factor which when added with 1 and then multiplied by the carpet area gives the super built-up
area. The correct formula for calculating loading factor is:

Super built-up area = Carpet area (1+ loading factor)

We must also understand that the genesis of Loading for a builder is to recover the cost of additional facilities that
he is providing such as lifts, lobby, maintenance room, generator room, parking, and terrace, to name a few. He
also needs to recover the opportunity cost of land used. For instance, in premium projects, the developer
provides amenities/facilities that are far more superior than the prescribed norms and hence forgoes the
opportunity of utilizing the available FAR for developing an additional saleable unit. So, the developer passes on
the additional financial burden to buyers in the form of both as an increased base price as well as higher loading.

The following figure illustrates what constitutes the loading factor in apartment projects.

The loading factor is always calculated as a percentage. This varies across projects and cities. The following
table gives the loading factor in the four major cities across the country.

Table 1: Loading factor in different cities

City Loading factor (%)

Mumbai Metropolitan Region (MMR) 50-60
Delhi-NCR 20-40
Bangalore 20-30
Chennai 25-30
While most of the builders do not mention the loading factor of a property while talking to a prospective buyer, it is
important that you know this term. This is because, if calculated properly, the loading factor gives the real value
for your investment.

An Example

To simplify the above mentioned formula for better understanding let us take the following example:

Let us assume, a builder offers a super built-up area of 1000 sq. ft. and the carpet area is 700 sq. ft. The extra
that the builder is charging is equal to 300 sq. ft. which is said to be the loading factor of the unit.

Lets do a forward calculation using the formula which is said to be ideally correct where carpet area is used for
calculation:

Carpet area x Loading Percentage = Loading Factor x 100

Loading Percentage = (Loading Factor x 100)/ Carpet Area
Where Loading Factor = Super built-up area Carpet area
Loading Percentage = (300 x 100)/ 700 = 42.85%

Interestingly, the formula which is most prevalent in the country, considers the super built-up area as against
Carpet Area. And this brings down the Loading Percentage to a large extent which the buyer might feel is
beneficial to him.

Super built-up area x Loading Percentage = Loading Factor x 100

Loading Percentage = (Loading Factor x 100)/ Super built-up area
Where Loading Factor = Super built-up area Carpet area
Loading Percentage = (300 X 100)/ 1000 = 30%

This shows that there is a clear difference of almost 13 % between the two. Hence, buyers must be aware of
what the builder is using in his calculations for the Loading Percentage. This will help him know the actual space
for which he is being charged extra.

How to calculate loading factor:

If the builder applies 25% loading factor it means 25% has been added to the carpet
Example
If the carpet area is 1000 sq.ft the super built-up area will be
1000sq.ft +1000x25% = 1250sq.ft

Super built-up area 1000 sq.ft

Carpet area = 700 sq.ft
Carpet Area x (1 loading factor) = Super built-up area
700 x (1- loading factor) = 1000
1-loading factor = 1.42
Loading factor = 0.42 or 42%

How Builders Calculate:

1000 x (1-loading factor) = 700

1 Loading factor -= 0.7
Loading factor = 0.3 or 30%

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Super Built-Up Area
Super Built-up area is a builders BFF! It is the area calculated by adding the built-up
area and common area that includes the corridor, lift lobby, lift, etc. In some cases,
builders even include amenities such as a pool, garden and clubhouse in the
common area. A Developer/Builder charges you on the basis of the super built-up
area which is why it is also known as saleable area.

Now let us consider this case the rate is Rs. 2,000 per square foot and the super
built-up area is 1,200 square feet, then the base cost will come up to 24 Lakhs.
When there is more than one apartment on a floor, the super built-up area is
calculated in a different manner. Let us assume this is the case.
The area of Apartment 1 is 1000 square feet
The area of Apartment 2 is 2000 square feet
The total common area is 1500 square feet, out of which the share of Apartment
1s common area is 500 sq. ft. while the share of Apartment 2s common area is
1,000 sq. ft.
Then the super built-up area of Apartment 1 is 1,500 square feet and of Apartment 2
is 3,000 Square feet. The super built-up area, as seen in this example, is divided in
the ratio of the apartments built-up areas (in this case 1:2).
Considering the fact that Builders and Developers usually price their apartments
based on super built-up or saleable area, being unaware of the fundamental
difference between carpet area and built-up area and other terms leaves one running
blind. Often the actual usable area is much lower than the super built-up area.