The Area Game

What you don’t know about how developers calculate the area of an apartment you might be considering buying, could cost you millions.

The more you know about how areas could be calculated, the better informed your buying decision will be.

Comparing apartments is an imperfect science of course.  So many variables can affect the perceived value of a given apartment, especially in Ethiopia where delivery timeframes (or delivery at all!) is not necessary something one can take for granted.  But ultimately, most buyers use a calculated price per square meter to constitute one element of a simple comparative system.  Even if you were comparing apartments at the same exact level of progress and planned finishing materials, prices per square meter are meaningless if you don’t know what’s included in the area of each apartment you’re comparing.

That’s because different developers use different methods to designate the area of a given apartment unit for sale.

If you were looking to buy a 100m2 apartment, what do you expect to be included in this area? The net, interior usable area?  Including walls? How about an assigned parking space for the apartment?  Or the shared areas of the building such as the hallways on each floor, stairways and elevator shafts?  As you might be able to tell from the alternatives considered above, there are a number of ways to represent an apartments’ area.  And the difference between considering a net living area of 100m2 and an alternative that includes all other possible areas which could be included in the representation can be very significant indeed – possibly resulting in a net living area of 60m2 or even less.

Does your calculated apartment area include your parking space? Typically found in the basement of course…

This is how one developer might sell you a 91m2 apartment with just 61m2 of net living space while another could sell you a 92m2 apartment with 92m2 of living space.

It should be important to note that this isn’t a matter of right and wrong.  As a matter of fact, there isn’t really a standard for how apartment areas should be represented, even internationally.  It is simply a matter of the consumer being informed enough to make the right choice.

In the example we looked at above (which is an actual comparison of two apartment sizes from two different developers), the differences are particularly stark.

  Apt 1 – Net Area Based Apt 2 – Total Area Based
Advertised Area 92 91
Net, Living Area 92 61
Wall area 10 8
External storage area 2 0
Parking 14 0
Common areas 15 22
Total area 133 91
Price (ETB) 2,100,000 3,100,000
Price / sqm of net area (ETB/m2) 15,790/m2 34,066/m2
Price / sqm of slab area (ETB/m2) 20,588/m2 44,927/m2
Price / sqm of net area (ETB/m2) 22,826/m2 50,820/m2

From the table above you can see how dramatically price per square meter can change depending on what you consider to be the area of the apartment.  Particularly when large allowances for common areas are inserted.  Here’s how the very same apartment might be presented under differing sizing approaches:

  Size Total Price Price/m2
Net Living Area 100m2 2,500,000 25,000
Slab area 110m2 2,500,000 22,727
Slab area + common areas 130m2 2,500,000 19,230
Slab area + common areas + parking 145m2 2,500,000 17,241

You can see how the very same apartment can have its price per square meter seemingly lowered by simply referring to a reference area which might not meet your expectations.  Conversely, the seemingly bigger apartment size can also be used to justify a higher total price.

Adding to the problem of comparing apartments based on areas calculated differently is the fact that most developer apartments in Ethiopia are sold well before the project is partitioned.  Meaning that you are not likely to have even a physical sense of the attendant sized differences.

Are standards the only thing applicable?  Not necessarily.  Under Ethiopian practice, a title deed for an apartment will generally consist of the slab area for that unit as well as any external areas (e.g. storage or parking) that are exclusively for the use of the title deed holder.  In other words, assigned storage and parking can be included on a title deed but shared spaces cannot.

Whichever way you look at it, the operative phrase is “Buyer beware!”  So next time you look at a potential apartment for sale, be sure to have an exact idea of how big the net area of the apartment is and make your comparisons based on that.

Terminology that should be generally applicable:

  • Net area = the net living space inside an apartment, not including wall areas
  • Slab area = net area plus interior wall areas plus a portion of shared exterior walls (generally, this is what should appear on a title deed encompassing all owned areas such as parking and storage)
  • Gross area = Slab area plus a share of all (usually) common areas (hallways, stairs, lobby, parking circulation, green areas, etc.)