introduction

Before developers plan a new real estate project, one of the first steps is to analyze the property to determine its potential. Understanding how to maximize available construction and living space is key to a successful project. In this blog, we explain the formula that developers use to make an initial statement about the attractiveness of the property.

Plot size x occupancy rate = floor area; floor area x 0.75 = living space

This formula helps to get an initial assessment of the potential of your property. It is important because a well-founded feasibility study is complex and entails costs of several thousand francs. With this formula, you can assess whether a feasibility study makes sense. At Creatio, we specialize in sustainable development and transform unused potential into valuable, environmentally friendly living spaces.

Step 1: Understanding land and permitted use

The size of the plot is the first variable that developers analyze. This is measured in square meters (m²) and indicates how much space is available in total for development. However, not the entire area can be built on, as building regulations, zoning laws and border distances as well as construction lines must be observed.

Here comes the Exploitation into the game. This indicates how many buildings may be built on a plot of land. Which key figure is used depends on the applicable building zone regulations (BZO), and the applicable value in turn depends on the building zone in which the plot of land is located.

• Auf https://map.geo.admin.ch/ Can you access all geoportals in Switzerland in order to identify the construction zone using an address search.
• Under https://www.cadastre.ch/de/cadastralinfo-online-zu-grundstueckinformationen Can you use an address search to retrieve the ÖREB cadastral extract, which provides information about the property

When exploiting, it is important to differentiate between the following key figures (SIA 421):

• Utilization rate AZ: It sets the usable area in relation to the land area.
  • Utilization figure = eligible floor area/eligible land area
• BMZ building mass figure: It indicates the ratio of the building volume over the relevant terrain to the eligible land area
  • Building mass figure = construction volume over relevant terrain/eligible land area
• Development rate UEZ: The ratio of the eligible building area to the eligible land area.

Because the AZ utilization rate is still very widespread, we will focus on its use below.

instance

We have a 1,000m² plot of land with a utilization rate of 60%, so 600m² of floor space can be created.

This is a rough approximation because the exploitation does not always take place on the property, for example because border distances, construction lines or other regulations prevent this.

Tip: Always check with local authorities or a local real estate professional how much your property is being exploited.

Step 2: Calculate the realizable living space

After calculating the floor area, we know how many buildings can be built. But what is really interesting is how much living space you create. No one pays for a stairwell or a riser.

For this reason, construction, traffic and functional areas are deducted from the floor area. As a rule of thumb, you can assume that they take up around 25% of the floor area.

instance

In the previous example, the 600m² floor area thus results in a main usable area of 450m², which is available for living space (or other uses).

Tip: Work with architects and engineers who specialize in space optimization. The less space is lost for technical rooms, the more living space can be created.

Step 3: Analysis of expenses and income

As soon as it is clear how much living space can be created, the evaluation of profitability begins. Depending on the location, very different prices for housing are in line with the market. On average for the whole of Switzerland in 2024, an apartment costs an average of CHF 8,416 per m² as residential property and CHF 203 per m² per year as a rental property.

The earnings situation must be examined specifically for the municipality and the location, the microlocation. As a rule, the house bank is a good place to get an assessment.

Revenue is offset by costs. These vary greatly, depending on whether an existing property has to be demolished, contaminated sites have to be removed or the building plot is demanding. As a very rough rule of thumb, construction costs of around CHF 5,000 per m² of main usable space can be assumed.

At Creatio, we focus on sustainable solutions that maximize living space while minimizing environmental impact. By using environmentally friendly building materials and energy-efficient designs, we ensure that every project benefits both users and the environment.

instance

In our project, we can realize a total income of 450m² x CHF 8,416 = CHF 3,787,200. The big question now is what costs this entails. Assuming the average value of CHF 5,000 per m² of main usable space, the construction costs CHF 2,250,000. The gross profit of the project is therefore 1,537,200. The costs of marketing and financing must be deducted from this so that the residual value results as the price that can be paid for the plot of land.

Tip: Work with a professional development partner. In addition to buying the land, we are also open to considering a joint development.

Why analyzing land is important

The formula Plot size x occupancy rate = floor area; floor area x 0.75 = living space is a good approach for carrying out an initial potential analysis without cost consequences. If the result is positive, a professional feasibility study ensures that the theoretical potential can also be effectively realized. Because the final planning of a construction project involves massive costs, you need a certain amount of certainty that these are justified.

Free advice for your project

Are you interested in learning how your property can be developed into a valuable, sustainable project? At Creatio, we specialize in turning unused spaces into environmentally friendly projects with maximum living space.

Contact us today for a free consultation and find out how we create a project that is optimally tailored to your needs.

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