Behind the model
How the real estate model works
Every number in the calculator is derived bottom-up from your inputs — no black box. Below is each formula, paired with a worked example from the default 2-acre, FAR 2.5 sale-mode development. Change any input in the tool and these relationships hold.
Buildable area
Land and the entitled floor-area ratio (FAR/FSI) give the built-up area; the saleable loading factor converts it to the super built-up area India actually sells on (RERA still requires the carpet area to be disclosed to buyers).
Built-up (FSI) 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
FAR utilisation
built-up ÷ land sq ft (realised FAR vs entitled)
2.50 of 2.5 entitled
Development cost
Land plus stamp duty, hard construction (per sq ft of built-up), soft costs, custom line items, a contingency, and interest-during-construction. Cost per sq ft is an output, never an assumption.
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
Contingency
(construction + soft + lines) × 5%
₹4.62 Cr
Interest during construction (IDC)
cost × debt% × interest% × (months ÷ 12) × ½
36 mo → ₹8.68 Cr
Total project 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
Sale mode books sale value (less cost-of-sales and selling cost); lease mode books rent net of operating expenses as NOI. Sale prices are ex-GST — the buyer pays 5% GST on under-construction units (0% once the occupancy certificate is in).
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 recognized × effective rate × (1 + escalation)^(yr−1)
+5%/yr on later sales
Cost of sales
total project cost × (sq ft recognized ÷ 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)
stabilized: ₹27.7 Cr/yr
NOI (lease)
rent − operating expenses (25% of revenue)
stabilized: ₹20.8 Cr
Pre-sales & construction-linked collections
The defining Indian residential cash-flow mechanic: units are booked from launch, buyers pay construction-linked instalments into a RERA escrow (70% of collections, released pro-rata to progress), and the un-presold inventory sells after completion. Revenue is recognized at handover, so tax lands in the delivery year — only the cash timing moves, and total collections always equal 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 yrs from delivery
Conservation
Σ collections = total sale value, at any presold %
₹250 Cr either way
Absorption & phasing
The un-presold inventory sells evenly over the absorption window after completion; lease space ramps up occupancy to a plateau. A staged (phased) build delivers blocks over time, each on its own clock, with cost, debt and pre-sales collections timed to delivery.
Absorption (sale)
un-presold saleable area ÷ absorption years, sold each year until exhausted
83,853 sq ft over 3 yrs
Occupancy ramp (lease, linear)
start + (stabilized − start) × (age−1) ÷ (ramp yrs − 1)
40% → 92% over 3 yrs
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
Financing — debt, moratorium, tax
Development debt with an interest-only moratorium during construction, then principal amortizes over the remaining tenor. Tax is assessed on accounting profit with loss carryforward.
Debt / equity split
debt = total cost × debt% ; equity = remainder
₹50.9 Cr debt · ₹119 Cr equity
Principal moratorium
interest-only for the first N years from first delivery, then amortize
0 yr grace, 3 yr tenor
Equal-principal repayment
debt ÷ (tenor − moratorium) each amortizing year
₹17 Cr / yr (first due year 1)
Annuity (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-yr life; sale mode has none
Tax (with loss carryforward)
max(0, profit − losses) × 25% ; losses carry forward
shelters early-year losses
Returns & coverage
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 mo → 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 yr
DSCR
CFADS ÷ debt service (amortizing 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
Lease exit — terminal value
A lease-and-hold asset is valued at exit by capitalizing the stabilized NOI; any gain over net book value is taxed at the capital-gains rate. Sale mode has no terminal asset — the inventory is sold during the model.
Terminal value (lease)
stabilized NOI ÷ 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 transparent planning estimates, not a quote. A real development needs a proper feasibility study — that’s where we help. Open the calculator →