5 COSTING AND FEASIBILITY

5.1 INTRODUCTION

This chapter focuses on the financial analysis which is an important part in

evaluating the financial viability of the proposed development. Through the calculation by
applying simple accounting methods, an estimation of the expected development value and
cost, as well as time period required for construction can be get. The developers can use
this analysis as benchmark to proceed with the development phase later. Besides, this
chapter is very essential to developers, investors and financial institutions as it will
determine whether the project to be developed is worth for investing as well as generating
profit to any of them.

Moreover, the proposed development is divided into 4 phases and takes 12 years to
implement it. This section will cover the entire budget from the planning stage to properties
sell. The estimation of Gross Development Value (GDV) and Gross Development Cost
(GDC) in financial analysis will help in determining the development phase of the project.
The ROI (Return of Investment) of the proposed development will provide further
information and data of the overall value of the project.

5.2 GROSS DEVELOPMENT COST (GDC)

Gross Development Value (GDC) is can be defined as the estimation of the total
cost development. Initial costs and operating costs are required in order to calculate GDC.
Besides, GDC included Preliminaries Cost, Construction Cost, Infrastructure and Utilities,
Landscape Work Costs, Developments Charges, Construction and Professional Fess, Legal
Fees, Management Costs, Marketing and Advertising Costs, Contingency and Interest on
Loan.
5.3 Gross Development Value (GDV)

Gross Development Value can be defined as the market value of the completed
proposed development. GDV included revenue from the sales, lease and rental of property.
There are different types of property can be sold such as residential, commercial and
industrial. However, the prices of the properties that will be sold are based on the existing
market value, the locality and the materials of used for construction.

5.4 Return of Investment (ROI)

The percentage of benefit gained from the proposed project will be calculated by
using the formula of Return of Investment. ROI helps to measure the profitability of the
proposed project. By using the calculation result of GDC and GDV, the ROI can be
calculated. Besides, ROI can described as a “bottom line” to the management team to
decide and determine the project can be continued to construct or have to revise and tweak.
The viability of the project also can be determined by using the ROI. Once the viability of
the project is 20%, it can be said that the project is much viable.

5.5 Calculation of GDC, GDV and ROI

5.5.1 Gross Development Cost Hartamas Impiana Height Construction Cost

The calculation of GDC for the proposed development of Hartamas Impiana Height
Gross Development Cost is showed in Table 5.5.1.7.
 Table 5.5.1.1: Construction Cost of Hartamas Impiana Height

Component Land Area Total Acre Built-up Area (Sqf) Total Built-up Area (Sqf) Price/ Sqf (RM) Prive/ Unit (RM) Unit Total (RM)
Hartamas Impiana Height
Construction Cost

Affordable House
(RMMJ) 1 Storey 1,200 44.08 1,070 1,712,000 MYR 49.84 MYR 53,333.33 1,600 MYR 85,333,328.00
Affordable House
(RMMJ) 2 Storey 1,200 44.08 1,400 2,240,000 MYR 71.43 MYR 100,000.00 1,600 MYR 160,000,000.00
Terrace ( 2 Storey ) 1,650 45.45 1,800 2,160,000 MYR 166.67 MYR 300,000.00 1,200 MYR 360,000,000.00
Cluster ( 2 Storey ) 3,200 57.30 3,400 2,652,000 MYR 186.27 MYR 633,333.33 780 MYR 493,999,997.40

Total 6,050 191 8,764,000 MYR 1,086,666.66 3,580 MYR 1,099,333,325.40

Table 5.5.1.2: The Pre-Development Cost of Hartamas Impiana Height

Component Unit Or Acreage Price (RM) Total (RM)

Land Cost 308.46 MYR 25.00 MYR 7,711.50
Topography and Title
Survey 308.46 MYR 1,000.00 MYR 308,460.00
Land Conversion &
Premium 308.46 MYR 4,500.00 MYR 1,388,070.00
Building & KM
Submission
Fees 4200 MYR 450.00 MYR 1,890,000.00
Draft & Registration Fees 4200 MYR 200.00 MYR 840,000.00
Title Fees/ LJT 4200 MYR 500.00 MYR 2,100,000.00
Soil Investigtion 308.46 MYR 1,000.00 MYR 308,460.00
Total MYR 6,834,990.00
 Table 5.5.1.3: The Infrastructure Cost of Hartamas Impiana Height

Component Unit or Acreage Price Per Acre (RM) Total (RM)

Site Clearance 308.46 MYR 3,400.00 MYR 1,048,764.00
Earthwork 308.46 MYR 27,500.00 MYR 8,482,650.00
Road works 308.46 MYR 120,000.00 MYR 37,015,200.00
Drainage works including
Monsoon Drain 308.46 MYR 60,000.00 MYR 18,507,600.00
Water Reticulation 308.46 MYR 17,000.00 MYR 5,243,820.00
Water Reservoir/ Water 4200 MYR 6.00 MYR 25,200.00
Sewerage Piping
including STP 4200 MYR 14,000.00 MYR 58,800,000.00
External Elestrical &
street lighting 308.46 MYR 4,500.00 MYR 1,388,070.00
Telecommunication/
Reticulation 308.46 MYR 4,000.00 MYR 1,233,840.00
TNB 30.00 MYR 145,000.00 MYR 4,350,000.00
Provision for landscape 308.46 MYR 20,000.00 MYR 6,169,200.00
Playground 62.54 MYR 1,000.00 MYR 62,540.00
Total Cost MYR 142,326,884.00

Table 5.5.1.4: The Finance Cost of Hartamas Impiana Height

2% of Construction Cost Percentage Total

Total Finance cost 2% MYR 21,986,666.51

Table 5.5.1.5: The Marketingof Hartamas Impiana Height

2% of Construction Cost Percentage Total

Total Administration &
Marketing Cost 2% MYR 21,986,666.51
 Table 5.5.1.6.: The professional fee of Hartamas Impiana Height

7% of Total Construction
Cost Percentage Total Cost
Town Planner 0.50% MYR 5,496,666.63
Land Surveyor 0.50% MYR 5,496,666.63
TIA Consultant 0.25% MYR 2,748,333.31
EIA Consultant 0.25% MYR 2,748,333.31
Architect 2.00% MYR 21,986,666.51
C & S Engineer 1.00% MYR 10,993,333.25
M & E Engineer 1.00% MYR 10,993,333.25
Quantity Surveyor 0.25% MYR 2,748,333.31
Landscape Architect 0.25% MYR 2,748,333.31
Marketing Consultant 1.00% MYR 10,993,333.25
Total 7% MYR 76,953,332.78

Table 5.5.1.7: The Statutory Contribution and Fee of Hartamas Impiana Height

Unit Or Acrage Price Per Unit or Acrage (RM) Total (RM)

TNB Contribution 4200 MYR 450.00 MYR 1,890,000.00
IWK Contribution 4200 MYR 1,500.00 MYR 6,300,000.00
SAJ Contribution 4200 MYR 450.00 MYR 1,890,000.00
JPS & Maljilis Bandaraya
Johor Bahru 308.46 MYR 450.00 MYR 138,807.00
Improvement Service
Fund (ISF) Fees 308.46 MYR 950.00 MYR 293,037.00
TELEKOM Construbution 4200 MYR 200.00 MYR 840,000.00
CIDB (0.25% OF
Construction Cost) MYR 2,748,333.31
Developers Lisence &
Advertising Permit (3%
Total Construction Cost) MYR 32,979,999.76
Total MYR 47,080,177.08
 Table 5.5.1.8: Gross Development Cost of Hartamas Impiana Heights

Component Total
Construction Cost MYR 1,099,333,325.40
Pre-development Cost MYR 6,834,990.00
Infrastructure Cost MYR 142,326,884.00
Finance Cost MYR 21,986,666.51
Administration and
Marketing Cost MYR 21,986,666.51
Professional Fees MYR 76,953,332.78
Statutory Contribution
and Fee MYR 47,080,177.08
Total MYR 1,416,502,042.27

5.5.2 Calculation of Gross Development Value

The calculation of GDV for the proposed development of Hartamas Impiana Height
is showed in Table 5.5.2.1.
 Table 5.5.1.1: The Gross Development Value of Hartamas Impiana Heights

Component Land Area Total Acre Built-up Area (Sqf) Total Built-up Area (Sqf) Price/ Sqf (RM) Prive/ Unit (RM) Unit Total (RM)
Hartamas Impiana Height
Construction Cost

Affordable House
(RMMJ) 1 Storey 1,200 44.08 1,070 1,712,000 MYR 74.77 MYR 80,000.00 1,600 MYR 128,000,000.00
Affordable House
(RMMJ) 2 Storey 1,200 44.08 1,400 2,240,000 MYR 114.29 MYR 160,000.00 1,600 MYR 256,000,000.00
Terrace ( 2 Storey ) 1,650 45.45 1,800 2,160,000 MYR 266.67 MYR 480,000.00 1,200 MYR 576,000,000.00
Cluster ( 2 Storey ) 3,200 57.30 3,400 2,652,000 MYR 280.88 MYR 955,000.00 780 MYR 744,900,000.00

Total 6,050 191 MYR 1,675,000.00 3,580 MYR 1,704,900,000.00

5.5.3 Calculation of Return of Investment

The Return of Investment (ROI) for the proposed development projects as shown
below:

Profit = Gross Development Value (GDV) − 𝐺𝑟𝑜𝑠𝑠 𝐷𝑒𝑣𝑒𝑙𝑜𝑝𝑚𝑒𝑛𝑡 𝐶𝑜𝑠𝑡 (𝐺𝐷𝐶)

= RM 1,704,900,000.00 − RM 1,416,502,042.27
= RM 288,397,957.73

𝑃𝑟𝑜𝑓𝑖𝑡
Return of Investment (ROI) = × 100%
𝐺𝐷𝐶
RM 288,397,957.73
= × 100%
𝑅𝑀 1,416,502,042.27
= 20%
6 Reference

Portal Rasmi Jabatan Perumahan Negara. (2018). Retrieved from

http://ehome.kpkt.gov.my/index.php/pages/view/410. Retrieved from 2 December 2018.
San Ong, T. (2013). Factors affecting the price of housing in Malaysia. Available on the Internet:<
http://www. globalbizresearch. com/images/files/73848_JEIEJB_% 20Tze% 20San, 20.
Schnare, A. B., & Struyk, R. J. (1976). Segmentation in urban housing markets. Journal of Urban
Economics, 3(2), 146-166.