As we said in our earlier post that we went to the fields in Jaipur to explore this sector further, today we
share with our readers a prevalent model in this space. During our visit to
actual sites and meeting with various people closely associated with RealT, we
came across a model that is highly prevalent in Tier 2 cities at present. Let’s
share some insights on this topic.
What exactly is G+2?
Due to recent developments, Tier
2 cities have stringent land by-laws. These laws restrict unplanned and uneven
growth of these cities which are on their way to become mega cities. One such
by-law restricts the vertical growth of town to a certain limit, based on the
size of plot and width of the road on which the plot is located.
 |
| A typical G+2 construction |
Paying full respect the laws,
Builders & Developers have devised an alternative to make optimum use of
the available plot and have come up with the concept of Ground+2 floors. Now depending on the designs prepared by the
Architect, Builder can erect 4-6 flats on that small piece of land. Generally these
plans are designed in a way that there is ample space for parking of 4-6
vehicles alongside the building. If the dimensions of plot doesn’t allow ample
parking space, Builder can even go for Stealth floor for parking. Even in this
case, the next 3 floors will be counted as G+2.
 |
| G+2 with stealth floor |
Benefits of G+2
- Ideal for mini-builders
- Cost of construction minimizes due to economies of scale (multiple constructions on the same piece of land)
- Pretty good profit margin
- Easy to sell
- Time-to-complete the project is small
Why is it lucrative for mini-builders?
Small Investors and new entrants
prefer this model of RealT so much so that you would see hundreds of such
projects going on in Jaipur all around. The reason being:
Low cost of Entry
|
These projects can be initiated with relatively small amount of money
as compared to traditional huge projects.
|
Minimized Risk
|
Even if all the flats are not booked, the builder is safe as he is
sitting on a valuable asset.
|
Funding Operational Costs
|
The operational costs of next floor can be funded by the bookings of
previous floor.
|
Controlled Expansion
|
The builder is free to pull back from going deep into the project at any
time.
|
Closing Remarks: Want to foray into Real Estate? – Go for the
above model, but don’t forget to do a proper market analysis for demand side!
---- Thanks for reading. Your comments will help
us improve our analysis. J ----
