We want to build a standalone dental practice that will be connected by a link to an existing practice. Since the new building is planned to be located at the rear of the property, we aim for a simple, rectangular structure of about 200 sqm (2,150 sq ft). The site is flat. The roof should be flat as well. Because the building will be rented out in a rural area of East Westphalia, we are aiming for low construction costs so that it makes sense both for us as landlords and for the dental group. Everything must be delivered as a turnkey project.
Now we have many questions:
Thank you in advance for your answers.
Now we have many questions:
- Is it possible to consider prefab house companies for a project like this?
- Who would be particularly suitable?
- Does modular construction make sense?
- What costs per sqm (sq ft) should be expected?
- Does it make sense to possibly build two stories?
- Would the business case improve if two rental condominiums are added on top on the second floor?
- For the apartments, a rent of approximately €10 per sqm (about $10 per sq ft) could probably be assumed, and for the practice €14. Is it currently feasible to build at these levels so that it is profitable?
- What should be especially considered during planning?
Thank you in advance for your answers.
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nordanney3 Dec 2024 23:04MarcellNiklas schrieb:
The question is how to achieve the most cost-effective construction for such buildings so that it makes sense for everyone involved. Are there companies specialized in this type of construction? You need an architect. Then you can look for options – but modular construction of this size is out of the question. The building is too small for that. G
MarcellNiklas schrieb:
Does the business case improve by adding two rental condominiums on the second floor? Higher land use almost always improves the case. But consider parking spaces, storage rooms/cellars, separate access, etc. Does the plot even allow for such a high density?
MarcellNiklas schrieb:
For the apartments, you could probably set €10 per sqm (square meter), and €14 for the practice. Can this currently be built profitably? You can calculate that yourself. If you exclude the land costs, since you already own the plot, you can make the project look profitable.
Are there incentives needed? Cost-sharing arrangements? Contributions for tenant interior fittings?
200 sqm (2,150 sq ft) practice at €14 (gross or net? Usually, doctors might be problematic for VAT deduction, so you might not be able to claim input VAT on construction). I assume gross.
==> €33,600 per year
2x apartments, each 85 sqm (915 sq ft), at €10 (rest being circulation areas, etc.)
==> €20,400 per year
Total: €54,000 per year
For a 5% return before taxes and operating costs, the building must not cost more than €1.1 million. This translates into construction costs of €2,900 per sqm (including ancillary costs). You won’t be able to build for that. So rather calculate with a yield of 3.5% BEFORE operating costs and taxes.
So no, the construction will not really be economically viable.
This is just a quick pragmatic example why even in residential new builds, such high rents are needed to make a project financially feasible.
MarcellNiklas schrieb:
No, seriously, I’m going to interpret this as you considering it an impractical undertaking. May I ask why? Seriously, the character of the area has to fit, the plot must still have available floor area ratio, and much more. You need dental practice slots in the district where the site is located, with a good mix of general dentists, orthodontists, and oral and maxillofacial surgeons, among others, and frontline locations are better suited for all of that. I don’t just do construction consulting; I have also worked in management for a medical care center developer. From my perspective, your plan sounds like a pie-in-the-sky idea; it will likely be difficult to find investors for it, especially since the group of partners is mostly limited to healthcare professionals.
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MarcellNiklas4 Dec 2024 07:5211ant schrieb:
Seriously, the area’s character has to fit, the plot must still have available floor area ratio, and much more. You need dental offices nearby in the district of the location and a good mix of general dentistry, dental specialists, oral surgery, etc., and for all of that, front-facing locations are better. I not only provide construction consulting but have also worked in the management of a medical care center developer. To me, your description sounds like a crazy idea unlikely to attract investors (especially since the group of shareholders is largely limited to professionals). As mentioned, there is already an existing practice in the front part of the plot, which is planned to be expanded with a separate building at the rear of the property. There is space and available floor area ratio for that. This also means there is already an established practice location.
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hanghaus20234 Dec 2024 10:59Why do you think new rental apartment construction in Germany has almost come to a standstill?
Is there even a dentist who wants to rent such a property yet?
Is there even a dentist who wants to rent such a property yet?
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MarcellNiklas4 Dec 2024 11:21Yes, it exists; as mentioned, the dentist currently located in the front part of the property wants to expand.
This will likely result in a long-term rental arrangement, so I would specifically ask him for a floor plan or at least a draft. If he optimizes it there, he will probably stay with you.
So, two specialist companies are assigned to this. What are their findings or the architect’s opinion regarding your initial questions?
MarcellNiklas schrieb:
Yes, we have already spoken with architects. Next, a dental depot will be involved in the planning.
So, two specialist companies are assigned to this. What are their findings or the architect’s opinion regarding your initial questions?
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