Behind the model
How the real estate model works
Every number in the model is worked out from your inputs; nothing is hidden. Below is each formula, paired with a worked example from the default 2-acre, FSI 2.5 development built to sell. Change any input in the model and the same formulas apply.
Buildable area
The land and the floor space index you are allowed (FSI, also called FAR) give the built-up area; the loading factor turns it into the super built-up area Indian flats are sold on (RERA still requires the carpet area to be shown to buyers).
Built-up area
land acres × 43,560 sq ft/acre × FAR
2 × 43,560 × 2.5 = 2,17,800 sq ft
Saleable / leasable area
built-up × saleable loading factor (super built-up convention, typically 1.05–1.15×)
2,17,800 × 1.1 = 2,39,580 sq ft
FSI used
built-up ÷ land sq ft (FSI used against FSI allowed)
2.50 of 2.5 allowed
Development cost
Land plus stamp duty, construction (per sq ft of built-up area), fees (soft costs), approvals and other cost lines, a buffer for surprises (contingency), and loan interest during construction. Cost per sq ft is worked out, never assumed.
Stamp duty + registration
land cost × 6.5% (5–7% + ~1% registration in most states; TN ~11% all-in)
₹3.9 Cr
Hard construction
built-up area × construction ₹/sq ft
2,17,800 × ₹2,800 = ₹61 Cr
Soft costs
construction × 12% (design, consultants, marketing, legal)
₹7.32 Cr
Line items
Σ custom cost lines (approvals, premium FSI/TDR, site infra…)
₹24 Cr
Buffer for surprises (contingency)
(construction + soft + lines) × 5%
₹4.62 Cr
Interest during construction (IDC)
cost × debt% × interest% × (months ÷ 12) × ½
36 months → ₹8.68 Cr
Total development cost
land + stamp duty + construction + soft + lines + contingency + IDC
₹170 Cr
Cost per built-up sq ft (derived)
total project cost ÷ built-up area
₹7,782 / sq ft
Revenue: sale vs lease
Built to sell, the model books sales less the cost of the units sold and selling costs. Built to lease, it books rent less running costs as net operating income (NOI). Sale prices are before GST: the buyer pays 5% GST on flats under construction and none once the occupancy certificate is issued.
Effective sale rate
base price × (1 + other charges 8%): PLC, parking, club & infra charges
₹9,500 × 1.08 = ₹10,260/sq ft
Sale revenue (per year)
sq ft recognised × effective rate × (1 + escalation)^(yr−1)
+5% a year on later sales
Cost of sales
total project cost × (sq ft recognised ÷ total saleable)
matched to units handed over (non-cash accrual)
Selling cost
sale revenue × 4% (brokerage, marketing)
year 1: ₹7.54 Cr
Gross profit (sale)
revenue − cost of sales − selling cost
year 1: ₹51 Cr (27% margin)
Lease rent (per year)
leasable × occupancy × rent/sq ft/mo × 12 × (1+esc)^(yr−1)
steady year: ₹27.7 Cr a year
NOI (lease)
rent − operating expenses (25% of revenue)
steady year: ₹20.8 Cr
Pre-sales and payments during construction
How Indian housing projects are funded in practice: units are booked from launch, buyers pay instalments linked to construction, 70% of what they pay goes into a RERA escrow account released as the build progresses, and the unsold units sell after completion. Revenue counts at handover, so tax falls in the handover year; only the timing of the cash moves, and total collections always equal the total sale value.
Pre-sold value
saleable × presold% × effective rate (booked by completion)
65% → ₹160 Cr
Collections during construction
presold value spread ratably across the construction years (milestone instalments)
₹120 Cr before handover
Possession tranche
the final instalment of the presold value arrives in the delivery year
year 1: ₹68.6 Cr cash received
Post-completion sales
remaining 35% sells over the absorption window at escalated prices
3 years from handover
Conservation
Σ collections = total sale value, at any presold %
₹250 Cr either way
Sales speed (absorption) and phasing
The units not sold before completion sell evenly over the selling period afterwards; leased space fills up to a steady level. A phased build hands over blocks over time, each at its own pace, with cost, loan and buyers’ payments timed to each handover.
Sales speed (absorption, built to sell)
un-presold saleable area ÷ absorption years, sold each year until exhausted
83,853 sq ft over 3 years
Occupancy ramp (lease, linear)
start + (stabilised − start) × (age−1) ÷ (ramp yrs − 1)
40% → 92% over 3 years
Phased build (vintages)
each block: capex + debt drawn the year before delivery, presold milestones collected in its build year, then sells/leases on its own clock
empty = single all-at-once delivery in year 1
Loan, repayment holiday and tax
A development loan with an interest-only repayment holiday (moratorium) during construction, then principal repaid over the rest of the loan term. Tax is worked out on accounting profit, with losses carried forward.
Debt / equity split
debt = total cost × debt% ; equity = remainder
₹50.9 Cr debt · ₹119 Cr equity
Repayment holiday (moratorium)
interest-only for the first N years from first delivery, then amortise
0-year holiday, 3-year loan term
Equal-principal repayment
debt ÷ (tenor − moratorium) each amortising year
₹17 Cr a year (first due in year 1)
Fixed EMI option
debt × r ÷ (1 − (1+r)^−(tenor−moratorium))
level payment alternative
Interest
outstanding balance × interest rate
year 1: ₹6.1 Cr
Depreciation (lease only, straight-line)
total project cost ÷ building life
30-year life; none when built to sell
Tax (with loss carryforward)
max(0, profit − losses) × 25% ; losses carry forward
shelters early-year losses
Returns and loan cover
The unlevered cash flows give the project view; the equity cash flows give the geared view. Project IRR uses a separate project tax that excludes the interest shield, so it is financing-independent. Cost-of-sales is a non-cash accrual, the cash was spent building, captured at t=0. Pre-sales collections received during construction sit on the pre-operating timeline, shrinking the net up-front outflow.
Unlevered (project) FCF
cash receipts (net of selling cost, adjusted for collections already received) − project tax − capex
Project IRR 13.7%
Equity FCF
PAT + non-cash (deprec. / cost-of-sales) ± collection-timing adjustments − principal − equity-funded capex
Equity IRR 23.6%
Construction lead
ceil(months ÷ 12) − 1 zero years inserted before operating cash flows
36 months → 2 lead year(s)
NPV
Σ unlevered FCF ÷ (1 + discount)^t
@ 12% = ₹5 Cr
Payback
year cumulative unlevered cash flow first turns positive
3.0 years
DSCR
CFADS ÷ debt service (amortising years only, moratorium excluded)
min 1.32× · avg 1.65×
LLCR
PV(CFADS over loan life) ÷ debt
1.70×
Equity multiple (MOIC)
Σ equity cash returned ÷ equity invested
1.56×
Break-even (sale)
sale price/sq ft at which NPV = 0
₹9,173/sq ft
Built to lease: value at the end
A building held for rent is valued at the end from its steady-year rent after running costs (NOI) and the exit yield (cap rate); any gain over its book value is taxed at the capital-gains rate. A project built to sell has no end value: the units are sold during the model.
Value at the end (terminal value)
steady-year NOI ÷ exit yield (cap rate)
₹20.8 Cr ÷ 8% = ₹260 Cr
Net book value at exit
total project cost − accumulated depreciation
basis for the taxable gain
Capital-gains tax on exit
max(0, terminal value − net book value) × cap-gains%
12.5% → ₹18.3 Cr
Sale mode
no terminal value: units are sold over the absorption window
terminal value = ₹0
These are planning estimates you can check line by line, not a quote. The typical Indian figures are assumptions from public sources, not ClarWorks data, and every one can be changed in the model. Open the model →
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