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Launching affordable housing not as easy as it seems

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Launching affordable housing not as easy as it seems

Responding to union minister for housing and urban poverty alleviation (HUPA) M Venkaiah Naidu’s call for greater participation of private sector developers in the Centre’s Affordable Housing for All initiative under the Pradhan Mantri Awas Yojna (PMAY), real estate experts say launching such projects is not easy. Builders will have to first ensure the viability of the project and see to it that the land on which it is coming up is not expensive.

While some builders with existing projects are planning to bring in budget housing there, others say such moves require careful thought. If built far away from the city, such units will remain unsold and become virtual ghost towns.

The Prateek Group will launch 60 sq m units as part of its third and fourth phases in its existing Grand City project in Siddharth Vihar in Ghaziabad. “We are planning to launch 1500 units after April. The unsold stock (in the existing project) will also get Pradhan Mantri Awas Yojana interest subvention benefits. Pricing for the new launch is yet to be worked out,” says Prashant Tiwari, chairman of the company.

Deepak Kapoor, director, Gulshan Homz and president Credai Western UP says that his company will analyse the affordable housing scheme. “We are waiting for the final notification. We will evaluate it once the final notification is released,” he says.

Experts also say that with fewer housing launches, many investors, like in the past, could make a beeline for affordable homes and exit after prices appreciate. That could lead to oversupply problems that the market is currently facing.

Taking on a project has become a huge issue for builders at this juncture. First, many do not have the cheap land that’s essential to launch new schemes. Second, starting anything new does not make sense to builders whose existing projects are already delayed. About 11 lakh units currently remain unsold across the country. These are the main reasons why developers are deferring launches in this segment, says Pankaj Kapoor of Liases Foras.

Places where land is cheap are far away from cities and have virtually nil demand. “One can create affordable housing in Panvel (near Mumbai) but if the social fabric is missing. Who will live in those locations? Real estate never has a knee-jerk impact, affordable housing schemes may gain pace subsequently, perhaps in the next three to six months,” he says.

Granting infrastructure status to affordable housing is a positive step and will ensure long term funding at cheaper rates. Developers are trying to draw up strategies to tap the market at the bottom of the pyramid. Announcements are expected for this segment both in some existing projects or as new launches, but that will start to happen only in the next two to three quarters, says Rohit Modi, director, Ashiana Group and vice president, Credai national (Confederation of Real Estate Developers Associations of India).

Density norms are also a challenge. Several state affordable housing policies need to be aligned with the definition of the government’s affordable housing policy. Companies could also set up separate verticals to handle affordable projects, he adds.

Sheltrex Developers, which focuses on developing budget units in peripheral areas in large cities, is exploring opportunities in Delhi-NCR. “In Delhi we have already initiated the process. We are waiting for the land pooling policy to come through and are exploring about 100 acres on which we intend to launch around 8,000 to 9,000 units. Subsequently we will set up a full fledged team in Delhi,” says Sandeep Singh Gaur, CEO of the company.

At the national level, the company intends to deliver about 50,000 units by 2021 and about 70,000 units by 2022.

The affordable housing segment is akin to the manufacturing industry as it is a volume-driven business. PMAY is a game changer. Earlier, to be eligible for PMAY, the salary limit was Rs 6 lakh, the biggest challenge that housing financial companies faced was to establish the credit worthiness of customers. Now with the household income of consumers increased to Rs 18 lakh per annum, it will boost demand and help financial institutions to easily establish the creditworthiness of consumers, he says.

There are others who are not optimistic about the success of the scheme. Amit Wadhwani, director of Sai Estate Consultants, channel partners for over 32 developers, says that the scheme may not see huge demand in major cities.

“Initially the segment may see investors wanting to pool in money hoping that there will be appreciation in this segment but as far as the end- users are concerned, I am not very optimistic. The average age of a homebuyer today has decreased and ranges from above 40 to 27 years to 35 years. Their average salary is anything between Rs 1 lakh to Rs 1.5 lakh per month. In a place like Mumbai where a house in the suburbs costs nothing less than Rs 75 lakh, I do not see this profile of homebuyers occupying homes in the periphery. They would prefer to pay Rs 50,000 as rent in the main city and invest additional funds in either equity or debt where the rate of return will be anything in the range of 14% to 15%.

“The biggest challenge will be absorption of these units. Who will buy these houses? Will investors hold it for some time and then exit with negative returns?” he asks.

SOURCE:Hindustan Times

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NTR Housing Scheme In Full Swing: Chief Minister N. Chandrababu Naidu

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NTR Housing Scheme In Full Swing: Chief Minister N. Chandrababu Naidu

On Thursday, Andhra Pradesh Chief Minister N. Chandrababu Naidu said with the estimated expense of Rs. 5,556.74 crore, the construction of more than 2,44,164 houses, out of the proposed 3,03,044, has been commenced under the NTR Housing Scheme 2017.

While addressing the second day of the Collectors’ Conference he also said the construction of the remaining houses will begin soon. He mentioned that Prakasam and the Kurnool districts are ahead of the schedule in the urban housing scheme. Also, the works are in full swing in the Nellore and the Guntur districts under the rural housing scheme.

According to Naidu, the government will complete 2.5 lakh houses by January next year and another lot of two lakh houses by June.

By October 2, 2018, the state government intends to finish the construction of all the houses and plans to celebrate with massive house warming ceremony with local public representatives. This will help them set an example for housing schemes in other states.

Also Read: Raunak Group Presents Apna Pehla Ghar Campaign

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A Mumbai Suburbs’ Swift Transformation From Industrial To A Residential Zone: Wadala

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A Mumbai Suburbs’ swift transformation from industrial to a residential zone: Wadala

An industrial zone primarily, Wadala has undergone a drastic transformation in the past decade. Now an upcoming residential area, this Mumbai suburb is one of the seven islands to form the modern Mumbai. It is located on the Harbour line of Mumbai’s railway network.

Due to its proximity to BKC, large scale land development was inevitable, thus fueling the real estate market. Wadala is bordered by Dadar on the West, Matunga on the Northwest and Sewri on the South. Nestled between south Mumbai and the suburbs, Wadala enjoys strong connectivity by road and rail to most parts of Mumbai.

It has a number of flyovers like the Anik Panjrapol Link Road, Elevated road and Santacruz flyover. Thane, CST and Chembur are connected via the Eastern Highway while the Western Highway connects the locality to Bandra and Borivali. Wadala has the biggest bus depot in Mumbai. Furthermore, the multiple infrastructure initiatives like the monorail, Truck Terminal and the expansion of Highway are in various stages of development.

All this has given rise to residential demand and pushed the property value over the last few years. One of the most populated areas in Mumbai, Wadala has a large number of old temples, churches and dargahs, university campuses, schools, reputed hospitals and is also home to a former world’s largest IMAX dome theater. There are many stores, showrooms and malls around Wadala like the R Mall, High Street Phoenix and Palladium Mall.

Ramesh Nair, COO – business and international director, JLL India says, “A decade ago, property prices at Wadala were as low as Rs 2,800 per sq. ft. and it rose to Rs 14,000 a few years ago.”  As the infrastructure plans are on their way, so are the renowned developers like Ajmera, Dosti Group and Lodha Group among others.

Wadala at present offers one of the highest returns on real estate investments in the region. All the above-mentioned developers have their luxury projects in the area.

Ajmera I-Land introduces Aeon, Zeon and Treon towers with 2, 3 and 4 BHK plush homes. Conceptualized by renowned Singapore based Architects Space Matrix, these spaces with top-of-the-line lifestyle amenities exude exemplary class and finesse. The first residential floor begins at 110 feet from the ground level and offers several modern lifestyle amenities like kid’s pool, swimming pool, gymnasium, club house, open space and landscaped gardens, yoga room, kid’s play area and senior citizen corner.

Dosti Ambrosia is a 36-storey tower nestled in the 18 Acre Township of Dosti Acres. The architecture of the project was undertaken by renowned Hafeez Contractor in the 2 and 3 BHK apartments. It offers an exclusive rooftop swimming pool with 40,000 sq. ft. of landscaped gardens. You will find all modern conveniences like Gymnasium, Tennis Court, Indoor Badminton Court, Yoga and Meditation Room, Elderly Corner, Banquet Hall, Indoor Games, Indoor Badminton Court, Guest Rooms, Restaurant, Grand Entrance Lobby, Kids Play Area, 2 Club Houses and an Amphitheatre.

New Cuffe Parade by Lodha Group offers its residents all the comforts of a world-class lifestyle. The 2 and 3 BHK homes are spread in over 23 acres of land with 15 acres of stunning landscape and 75,000 sq. ft. of the club house. It includes 11 swimming pools, an organic farm, cricket pitch and multiple themed gardens. The buildings are designed by the world renowned WOHA in Singapore and the landscape was planned by Sitetectonix in Singapore.

Also Read: Mumbai to get Building Taller than Burj Khalifa, Road Bigger than Marine Drive

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Rajasthan Government May Hike The Affordable Housing Prices

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Rajasthan Government May Hike The Affordable Housing Prices

The prices of homes under the ambitious Mukhyamantri Jan Awas Yojana are expected to be increased by the state government.

According to the sources in the empowered committee meeting to be held on Monday, a proposal to increase the cost of a low-income group (LIG) and economic weaker section (EWS) houses will be proposed. Urban development and housing (UDH) minister Srichand Kriplani will chair the meeting. The LIG and EWS houses, presently are being constructed on government lands by private builders. These homes are sold at a fixed rate of Rs 1,250 per sq feet; out of which 1000 rupees per sq ft is given by Urban Improvement Trust (UIT), development authorities and local bodies to the builders.

According to provision 4(A) and 4(B), the developers are supposed to build EWS and LIG houses on government land. Seventy-five percent of such government land can be used in building EWS and LIG houses, while the remaining 25% can be sold by the developers. However, since the rates provided by the government are less the developers are not showing interest to construct houses under these categories. Sources said, “In Jaipur, not a single developer has shown interest in constructing houses under this model. The JDA has invited expression of interest (EOI) several times.”

The UDH is leaving no stone unturned to attract the builders in order to achieve the target of constructing 10 lakh houses by 2019. The sources mentioned, “As per the new proposal, the department has proposed to provide Rs 1,600 per sq feet rate to the developers. The land rates have increased subsequently over the period of time; this is why increasing rates has become a need of the hour.”

Sources further added, “The developers are constructing G+3 buildings at present. However, it is not cost-effective. It has been proposed to construct G+2 buildings for LIG and EWS category.”

Also Read: The Impact Of Regulations On The Real Estate Market

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