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Why are real estate developers focused on building more luxury apartments and not middle income apartments?

The most profitable flats on the market will be built by developers.

Before starting any building project, a detailed market analysis is conducted to determine the kind of apartment units that are in high demand in the local market.

Whether the market segment is targeted or not, the cost of development will be same.

Because we are considering two separate uses (middle and high income apartments) for the same parcel of land, the land price will be the same. To an estimate, labor, materials, and entitlement will all be in the same ballpark.

The property is valued according to its “highest and best use,” which simply means that if the parcel is entirely for apartments, the land is priced according to the nicest apartment building the market will support.

Smaller buildings have greater costs since there are no economies of scale. Due to increasing safety and construction costs, taller structures also tilt the scales in the wrong direction (about 50 percent Plus additional hard expenditures). As a result, the ideal building is big and low, with a maximum of 12 storeys.

A wise real estate developer will always offer a product that meets market demand while also making a profit.

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