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Constrcution cost + Rental situation


Constrcution cost + Rental situation

Last updated: August 5 2012
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  • Constrcution cost + Rental situation

    Dear Real estate experts,

    I have a plan of constructing apartment building on my own ground in Madipakkam. The purpose of the building is Own use + 3 rental portions. Total 3200 sqft of construction area and 620 sqft of car parking.

    How about the rental situation at South Chennai ( eg: Madipakkam, Velacheri Metro is 1.5 KM away from my land ) ? '

    How much rent I can expect for a 700 to 800 Sqft 2 BHK apartment ?
    How much rent for 450 to 500 Studio (1BHK) apartment ?

    I have received a quote from one of the builder and wanted to check with you guys opinion on the same. He promises very good quality of construction with good fittings inside the apartments.

    Building cost : Rs 1650 * 3200 sqft
    Car Parking: Rs 1300* 620 sqft
    Septic tank: Rs 10/litter
    Water sump: Rs 15/litter
    Compound wall: Rs 1500 / Rft

    Also, Some extra costs

    - For a portion only Master bed room will be provided with AC provisioning, other living room and bedrooms are extra cost.
    - Electricity connection for all portions ( Applying to EB and getting the meter fixed ) are extra
    - For flooring 2’ x 2’ Joint free Ceramic Tiles, if I need Marble/Marbonite this is extra

    All your suggestion and tips would be a great help for me in my first ever endeavour into constructing my own home.

    eagerly looking forward for good replies. Thanks !
  • #2


    Re : Constrcution cost + Rental situation

    Really I can't understand the Quote from the builder. If the total space is 3200 sqft and building cost is 1600 * 3200. Then from where the Car Parking: Rs 1300* 620 sqft and Compound wall: Rs 1500 / Rft . Where world is going ??

    I hard the bore or sump would be constructed as per feet. From where this Liters came?

    Buddy , to be honest with you .. letting for rentals is biggest problems these days because the latest rent control act does favour only for tenants , not for owners. After all spending so much using either your personal or bank loans sometimes you need to run behind them to get rents !!

    My suggesstions -

    1. Construct and sell it as apartment style at reasonable cost and profits !!

    2. Think about Leasing out portions for period of 2 to 3 years. Prefer Company guest
    houses or Service apartments

    Good Luck !!


    • #3


      Re : Constrcution cost + Rental situation

      Agree with @Yashhunt.

      Building rental units in outskirts is a waste of money.
      Put the money in FD and enjoy. Why go through so much of trouble?


      • #4


        Re : Constrcution cost + Rental situation

        Dear Friends,

        I have been tracking this forum for quite some time and this is my first post. Thanks everyone for keeping us so informed. I am a LT investor/LT user of Chennai RE and hope to share my thoughts and views henceforth


        • #5


          Re : Constrcution cost + Rental situation


          Madipakkam as of today (2012) is not outskirts by any stretch. It has been added to Chennai corporation an year back and flanked by Adambakkam in north, Nanganallur in west, velachery in north east and Pallikaranai in south. I would say that there is fairly good demand for Rental units in this place, due to relative proximity to all places in Chennai as well as to the IT Highway.

          I believe the rent you may get is also dependant on where in Madipakkam your plot/flat is located. I feel Rs 7000 to Rs 8000 pm rent for a 700sqft flat is easily doable, and I maybe infact very conservative. New 2BHK apts in Nanganallur start with 10K rent pm and Madipakkam should be easily 80% of that. But as i said, a lot depends on where you are in madipakkam. Waterlogged places in madipakkam (some parts) may fetch lower rent.


          • #6


            Re : Constrcution cost + Rental situation

            There is no issue with investing in suburbs for rental yield. I bought an independent house in Pallavaram for 28 lacs in 2006. I let out the entire property for Rs.5,500 pm immediately after I bought it. Now the rent for same property is Rs.11,000 and we are planning to increase it to 15,000 soon.

            Rents will eventually catch up everywhere, albeit slowly. Madipakkam is a great middle class residential locality.


            • #7


              Re : Constrcution cost + Rental situation

              I would add that as far as renting out, what matters is that the place you build should be in close proximity to high paying employers.

              Thus if you build a house in pattabiram or madhavaram (North Chennai), you may not get as much rent as if you build a house near kattankulathur or sithalapakkam (South Chennai) which are close to big IT employers.


              • #8


                Re : Constrcution cost + Rental situation

                Going by this logic rent in Siruseri must be higher than in Porur or Mogappair. Amenities also matters. My close friend owns independent house in Thoraipakkam, just a few steps from OMR and in a very decent locality. He is complaining of intense competition for tenants from luxury apartments coming all over OMR. Good tenants prefer to stay in apartments like these rather than in independent houses.

                I don't face this problem in Pallavaram as there are hardly any luxury apartment until Tambaram. Madipakkam/Adambakkam/Puzhudivakkam/Nanganallur also has the same advantage as Chromepet/Pallavaram/Tambaram. There is no competition from luxury apartments there.


                • #9


                  Re : Constrcution cost + Rental situation

                  OP wants to invest 70-75L to get less than 20,000 in rentals.
                  My sugestion is he can let out the property as is, forget about returns.
                  He can buy another property like a Flat for that amount.
                  Later, when the rental values increase he can spend money to build.

                  If he is retiree looking for income then it is fine. If you are young why not invest in another property.


                  • #10


                    Re : Constrcution cost + Rental situation

                    If you are a long term investor and your location is good in Madipakkam, then I'd suggest to go for construction. K11 idea is good, but it is like stock market - if the rent raises and you've multiple units, your rental income will increase substantially rather than having 1 luxury apt - agree that its rent increases as well, but not substantially compared to multiple units. The other headache of rental maintenance is always there for multiple units.

                    Regarding construction cost, go for 1300 to 1400 per sq ft and include car parking and septic tank in that. Usually all builders include those in general. Regarding sump go for Rs.10 to Rs.12 per litre and Rs.1000 for compound wall. These sounds reasonable for construction these days. If you go high in the rate, then ask for better material for tiles (Rs. 50 to Rs. 55) , bath room tiles - Rs.35 to Rs.40, good granite slab for kitchen, good brand for electrical work - by the way, dont forget to ask for inventor connection as part of the electrical work.

                    Good luck.


                    Have any questions or thoughts about this?