Sunday, July 6, 2008

More potential in affordable housing

Realty experts point to a shortage of 23 million residential units in India. The rising prices only add to the housing crisis.

But is it possible to develop affordable houses with such high input costs? Affordable housing is possible if land comes at an ‘affordable’ cost, says Mr Irfan Razack, Vice-President - Confederation of Real Estate Associations of India (CREDAI). “Unfortunately, such land is available only far away from the city, and hence government support in the form of necessary infrastructure is vital.”

Mr Kishore Jain, Managing Director, Jain Heights and Structures Pvt Ltd, a Bangalore-based real-estate company, says that affordable housing is the future for the real-estate sector. “Be it the mobile revolution or aviation revolution, the common man was able to benefit. You can see even a villager using mobiles these days, or people from small towns taking flights even till recently. But only in the housing revolution has it not been beneficial for the common man. Affordability is still an issue here,” he says.

SRZ, win-win for all

A notified region, such as special residential zone (SRZ) could be critical to solving the country’s housing crisis. “If the basic policy is formulated, other things, such as tax reliefs, will automatically fall in place,” says Mr A. Balakrishna Hegde, President – CREDAI-Karnataka.

Mr Razack says that large tracts of land should be identified for such purposes; “they can be bid and won by developers,” he adds. But the most important issue for developers would be “quick approvals from the government.”

“If land is available at better rates and tax benefits are also provided, then developers will be able to develop affordable units at rates that would benefit the purchasers or end-users,” says Mr Hegde.

Developers are interested in participating in initiatives such as SRZs if the government makes it a public-private partnership (PPP) level.

“If there can be a PPP for building an airport or laying roads, why not for housing,” asks Mr Hegde. But for us to help in clearing the deficit of housing units, we need certain policy changes, he adds. Foremost among them is softening of the tax component.

SRZs could be a win-win for all, developers feel. While end-users get good-quality houses at affordable rates, developers could also get better returns on investments.

Mr Razack says that quicker approvals mean faster completion of projects, which translates into quicker release of locked funds and thus better returns.

“The profit margins would be low on such projects, but quicker turnaround of these developments means that developers can take up other projects,” he adds.

Affordable housing projects

In what could be termed as a window to future trends, Jain Heights plans to launch an affordable housing project at Toranagallu in Bellary district of Karnataka in October.

“Houses will be available for less than Rs 10 lakh,” says Mr Kishore Jain, Managing Director, Jain Heights. Designs for the project have been finalised, and “we are awaiting approvals,” adds Mr Jain.

The project, which will see 7 lakh sq.ft of development, will have around 1,000 units. Of these, about 60 per cent would be single bedroom units — about 400-600 sq.ft each, and the rest would be two-bedroom apartments — maximum 800 sq.ft.

“The project will be ready in three years, and will be a phased development,” says Mr Jain.

“We plan to make it a self-sustained community. Though there will be a shopping area, much more like a departmental store, inside the complex, other infrastructure, such as hospitals and schools, is in the vicinity of the community,” he adds.

The idea is to promote a ‘walk to work’ culture, as Toranagallu is a mining and industrial town.

Jain Heights also plans to start a similar project in Bangalore, which is in the “conceptual stage now,” he adds. Land has been acquired already — 15 acres on Hosur Road, he says. “We will be able to develop 2 million sq.ft; however, we have not frozen other details yet.” He is hopeful that the project will be launched at the start of the next financial year.

“Bellary will be a pilot project,” Mr Jain says. The Bangalore project would have units at the sub-Rs 20 lakh price band, for, “anything above Rs 20 lakh cannot be termed affordable,” he adds.


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