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CASE STUDIES

Table 5: Standard Assumptions for Sample model for Individual Owner in Noida/Gurgaon
Financial analysis
Table 7: Assumptions for Financial Analysis
Cost (INR / sq. ft.) Cost Assumptions
Construction cost including -2,000
land development Flat Type 2 BHK INR
Fit-out -800 Flat Cost 80,00,000 Sq. ft
Escalation in Cost of 5.0% Carpet Area 900 %
Construction yearly Loan Interest 8.25% Years
Revenue Loan Tenure 15
Escalation in Revenue 5.0% Down Payment 30% INR
yearly (in %) Down Payment 24,00,000 INR
Mess coverage (% students 100.0% Loan Amount 56,00,000 INR
opting for the mess) Interest Amount 41,79,000 INR/ Month
Operating Expenses EMI Payable/month - 54,328 INR per sq. ft. per month
Admin, operations and, 8 Maintenance cost -1 INR per sq. ft.
maintenance (INR per sq. Furnishing Cost -500
ft per month)
Discount 18%
Property tax & licenses 5
(INR per sq. ft per annum) Revenue Assumptions
Occupancy 2
Marketing & promotion (% 2% Rent 12,500 INR/month
of revenue)
Annual Escalation 5%
Contingency (% of 1%
revenue) annum. Hence, the maximum the average starting salary in

Interest on deposit 6.5% rent-paying capacity is INR Mumbai as INR 8 – 10 lakh per
Capitalization Rate 10% 15,000 – 25,000 /month, and annum and by the standard rule
salary variation among major of 30% income spent on rent,
Discount Rate 18.0%
metro cities in India is not average affordable rental range
much significant. E.g. in the is INR 20,000 – 25,000. Hence, in
Table 6: Financial analysis Cash Flow
case of Mumbai where land the case of a city like Mumbai,
Cash Flow Period 25 Years value is exorbitantly high this the operating model is not much
Project IRR 26% model may not work efficiently. viable. The business models are
For example, take a Sample specific to the local land and
Project NPV (INR Mn) 14
calculation, where the average labour market.
Operator IRR 13% rent of a 2 BHK in Mumbai is
INR 55,000/month. If INR 55,000 STRATEGIC
Table 8: Cash Flow of Financial Analysis
is taken as 40%, then the total RECOMMENDATIONS
Cash Flow Period 33 Years charging amount per apartment/ FOR CO-LIVING
NPV (INR Mn) -1.17 month will be: INR 137,500. RENTAL MARKET
IRR 5% Considering four inmates in a 2 Despite all the shortcomings,
BHK, chargeable rent per month high growth in co-living sector
would be INR 34,375. Whereas

86 HUDCO-HSMI Publication