What is a Super Built-up Area

We are often asked what constitutes a super built-up area (SBA) and how it is calculated. On a lighter note, our standard response has been that SBA understanding and calculations are secrets and are not revealed to everybody. When you ask around to understand SBA, the more you enquire, the more you get saddled with various and often confusing feedback. We have become numb to this terminology. Any figure printed on a brochure/term sheet/offer letter is presumed to be the correct SBA and taken as granted.

The Real Estate Regulation Act (RERA) has significantly influenced property sales by mandating the use of carpet area (CA) as the sole criterion for sales. This act provides a precise and reliable standard for property transactions (carpet area), giving buyers and sellers confidence in their dealings. The act does not mention SBA at all. We are extrapolating the relevant portions of the act below.

"carpet area" means the net usable floor area of an apartment, excluding the area covered by the external walls, areas under services shafts, exclusive balcony or verandah area and exclusive open terrace area, but includes the area covered by the internal partition walls of the apartment.

"common areas" mean—

(i) the entire land for the real estate project or where the project is developed in phases and registration under this Act is sought for a phase, the entire land for that phase;

(ii) the staircases, lifts, staircase and lift lobbies, fire escapes, and common entrances and exits of buildings;

(iii) the common basements, terraces, parks, play areas, open parking areas and common storage spaces;

(iv) the premises for the lodging of persons employed for the management of the property including accommodation for watch and ward staffs or for the lodging of community service personnel;

(v) installations of central services such as electricity, gas, water and sanitation, air-conditioning and incinerating, system for water conservation and renewable energy;

(vi) the water tanks, sumps, motors, fans, compressors, ducts and all apparatus connected with installations for common use;

(vii) all community and commercial facilities as provided in the real estate project;

(viii) all other portion of the project necessary or convenient for its maintenance, safety, etc., and in common use;

Apart from the terms CA and SBA, we also encounter the term built-up area (BA). Generally, it is understood that when the area of external walls, exclusive balcony, exclusive open balcony, etc., is added to CA, the resultant area is called BA. In some cases, BA terminology is also known as plinth area. Ideally, the resultant figure is the SBA when the above-mentioned common areas are added to the BA.

Despite the clarity provided by RERA, it's rare to see marketing material that mentions the CA. Selling or leasing a project based on CA is not a common practice in the industry, making developers who do so stand out as a rare breed. RERA still needs to cover leasing services, but if something is developed and sold based on CA, it should also be leased on the same basis.

The above CA definition includes only the area inside an apartment or office without considering the external walls. Suppose detailed measurements are provided in the brochure; customers can measure the CA. Alternatively, their architect can measure it as part of their due diligence process for buying any property. Of course, the quoted per sft. price would be higher than if it were mentioned in SBA terms, but this price would be more relevant and transparent.

We are faced with two questions: first, what is efficiency and loading in the context of SBA, and second, what should end users do? First, let us understand some basics:

If SBA is 100 sft and the carpet area is 80 sft, then the efficiency of the space is 80% (% of CA/SBA). The loading here is 25% (% of (SBA-CA)/CA). If you have a 2000 sft apartment on which efficiency is 60%, then your CA is 1200 sft. In this case, the loading would be 66.67% (800 sft common areas on a CA of 1200sft). Do these numbers make any difference eventually? Sure, all this mathematics jumble will take a toll on the buyer’s budget; hence, let us explore this further.

The office market is a good starting point for understanding SBA and CA. Since large corporates are huge space occupiers, they ask many questions about efficiency and loading and get many answers around SBA/CA. We have found that the best-case scenario for efficiency is the large floor plates in the office segment of, say, 1L sft. Such plates generally give 75-80% efficiencies, meaning the CA is about 75-80K sft. This CA includes toilets and AHUs exclusive to this floor. In this case, the loading works to be 33.33% for 75K sft CA and 25% for 80K sft CA on a 1L sft floor plate. Let us assume this floor is sub-divided into two portions of 50K sft each, the efficiency gets lower, and loading increases as common corridors as access to the main lift and fire exits need to be created. If this subdivision splits the floor into four parts, efficiency gets lowered further, and loading increases further to accommodate more corridors for access.

Nowadays, office floor plates are planned exceptionally well, with 70-72% efficiency. If two or more tenants need to use the floor, the floor plates are carefully subdivided at the planning stage. The above efficiency calculation gives a loading factor of approximately 42% for a 70% efficiency and 38% for a 72% efficiency floor plate, respectively.

Prospective office tenants generally ask for details of loading calculations. A good indicator of a Grade A+ development is that they can provide details of calculating the loading factor. Detailed excel sheets are shared, giving minute details of what components/parts of the building constitute the loading factor used to calculate the SBA. These details are discussed at length by the projects team of both parties to understand/explain the SBA basis on which all other commercial aspects are negotiated. A joint measurement confirms the CA and the loading detailing confirms the SBA, giving commercial comfort to the developer and user.

Considering the above understanding, we can now evaluate residential efficiencies. In the residential segment, efficiencies would naturally decrease drastically, considering that a given floor plate needs to be subdivided into multiple small units, providing access to all the units and keeping three sides of an apartment open to the sky.

On the residential side, efficiencies can be 60-65% or lower, depending on the planning, sizing, layout, etc. The loading factor is approximately 66% to 53% at such efficiencies. These are serious numbers and need to be adequately understood by any prospective buyer while negotiating a deal.

It is uncommon to come across residential projects that can detail the loading factors. Some general factors will be explained to a prospective buyer to explain the SBA number and nothing more. Since RERA mandates CA as the only barometer to sell projects, the sanctioning authority (GHMC or HMDA) should adopt this mechanism.

Such a step could be a massive boost to the market. Residential buyers could be the biggest beneficiary of this transparent and honest way of calculating CA, which is the basis for everything else: future maintenance charges, charging corpus funds, bank loan calculations, etc. Our understanding is that currently, approvals are sort/given basis plinth areas, and post approvals, the loading factor is applied to get to the SBA. This system needs change as it lacks clarity & transparency. The final authority to specify the saleable CA must be the government agency, not otherwise.

Understanding efficiency and loading is imperative for residential and commercial end users. A non-scientific calculation could add a 15-20% increase to the SBA calculations, which is a huge number that the end users are paying for.

It is better to convert all offerings into CA to understand the purchase price better. For example, an end user evaluates three projects in a given locality. All options are 2000 sft SBA and quoted at Rs. 10000/sft. Project A offers 1200 sft CA, Project B offers 1400 sft CA, and Project C offers 1000 sft CA. When you convert the Rs. 2cr offer price in CA terms, then Project A is quoting Rs. 16,667/sft, Project B is quoting Rs. 14,285/sft, and Project C is quoting Rs. 20,000/sft. The quoted price in CA terms shows a significant variation of 20-30%. The end users should evaluate if these variations are justifiable with the offered specs, amenities, and precise location of the project. Such an analysis will always help the buyer make an informed and financially wise decision. The same logic holds good when you are renting commercial space.

In the long term, the real estate industry, like the financial services industry, can only benefit from better governance and more effective regulators, leading to significant growth and profits.