Builder confusion the financial case study

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20160418_210344Builder’s confusion – finance case

Abc builder have just brought plot measuring 20,000 sq feet of prime property just 20 meters from vashi railway station in palm beach road area facing sea. You are hired as a team of financial consultant to suggest the optimal usage of the property. Being a respected builder they will have no problem securing loan or getting clients. Various options were proposed: Option1 shopping mall Highest per square ft rate can be charged.. easy to sell.. but shopping malls not doing well in navi mumbai. 5 malls have closed down in last 2 years. But best roi for builder. Option 2 residential tower Lowest square feet rate.. navi mumbai has good potential for residencial flats. We can see many huge residential complexes in panvel and kharghar to substantiate the good demand. Option 3 office tower Closeness to station main attraction.. many good office towers are coming up in palm beach vashi area. Other options can be explored by your team. As a team suggest the best option for the builder…. ……………….   Please read the solution after thinking about and proposing your solution.     Solution Option1 shopping mall Last statement 5 malls have closed down in last 2 years means a lot. Bad investment as it’s malls are not commanding great footfalls. So rejected. Option 2 residential tower Statement – huge residential complexes in panvel and kharghar to substantiate the good demand… but they are further away from vashi this means a residential complex in vashi sea facing near station wil be best roi. Builder can charge premium to customers because of prime location.. selected.. Option 3 office tower Closeness to station main attraction.. many good office towers are coming up in palm beach vashi area. Many towers near station means it’s already competitive to market offices and navi mumbai is not business intensive area like andheri and all. So rejected. How ever as builder had paid premium and to increase his ROI we can have some space available for commercial usage. Like shopping mall or sco shop cum office space At lower floors. Summary builder should be advised to make a residencial tower with lower 3 floors as a shop cum office complex.  

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