Tuesday, March 11, 2014

Building Cheap Homes Using BSB
(Broad Sustainable Building)

Building cheap apartments from 300 to 700 sq. ft. of 20 to 30 stories.

Using the BSB system, a highrise building can be built in less than 20 to 60 days.

It will be cheaper and much faster than using the traditional ways. It is also more eco friendly, less labor intensive and less wastage.

A 400 sq.ft. studio home can be sold for RM100,000. Monthly instalment will be less than RM400 for a loan of Rm80,000, making it cheaper to buy than rent. It is ideal for single/double or family of three.

It can solve the severe shortage of cheap housing for the lower income group. It will also be more profitable if we can complete a project in 3 months instead of 3 to 5 years.

Best of all it can enable almost everyone to afford a home of their own.

Why are houses so expensive in Penang and in other cities?

The main reason is that it take 3 to 5 years to complete a highrise building project under the traditional way. Thereby incurring a huge labor, interest and other expenses.

A 50% margin on a 5 years project will mean only 10% simple annual return. To make a profit, most developers choose to build only high end high margin housing. Causing a severe shortage for affordable home for the lower and middle income group.

By employing the BSB system, we only need to make a slim margin to earn a reasonable return on investment assuming we can complete a project in 3 months or less.

For a 30-50 story residential building, land cost is quite insignificant. For land costing RM200 per sq ft, at plot ratio of 20, it will add only about RM10 to the cost of homes. Only about 10% or less of the selling price. Affordable homes can even be built on land costing RM500 or more.

We should be able to sell a 400 sq ft studio home for less than RM120,000 even without any subsidies. Tens of thousands of homes can be built in 6 to 12 months. Cost will be much lower because:
  • Maximizing sellable space by minimizing common area and facility
  • Utility rather than aesthetic design to maximize net sellable area
  • Employing BSB will save about 30% cost
  • Speed = fatter margin over time
  • Lower marketing cost if we sell below market price
  • More revenue by providing renovation service
  • Factor in S&P and legal fee to lessen final price and save paperwork and time

A way to prevent non or late payment of maintenance fee is to waive it altogether. We can collect a monthly fee for parking of cars and bike and security entry pass. They should be enough to pay for the maintenance of the building. Example RM60 for car, RM20 for motorbike and RM10 for 2 entry passes per month.

A 200+ sq ft apartment