Innovation is necessary
This will help builders recover any extra costs that they may have to incur for acquiring land without putting pressure on the buyers. At present, they are allowed 275 apartments of 1,000 sq ft each.
The proposal of giving more FAR is good and will ensure that the costs (at least in Noida Extension) do not go up further than 20%. It will help in averaging the cost of the product and help check any excessive increase in prices, says Gaur.
According to Subhankar Mitra, head - strategic consulting (West), Jones Lang LaSalle India, rising land cost is a serious concern as far as stability of supply goes, and the problem is only compounded by the existing steep costs of finished products in the metros. However, though developers can mitigate the cost by launching premium and luxury projects, only a small number of buyers for such products exist. In other words, this route will not prove to be effective for developers.
Demand is much higher for the budget homes segment of R25 lakh and below, which has not seen much supply for various reasons. If a developer targets this segment along with a mix of mid and high-end projects, it will prove to be a winning formula in the present market conditions.
The problem is that real demand exists in the affordable category. Post the 2008 slowdown, one found developers reducing unit sizes to rationalise prices to make houses more affordable. “They may again decide to come up with smaller configuration,” says Shveta Jain, director, residential, Cushman & Wakefield. “Demand for the R30 lakh home is the largest and developers cannot survive without catering to that segment. They will need to do some innovation in terms of cost of construction, adopt methodologies by way of which these costs can come down and make the product more affordable and efficient,” she adds.
And, there are some developers who are planning to do exactly that. “We are planning to go in for green and prefabricated structures. Even if costs go up (as in the case of Noida Extension), they will be in the fringe of affordable due to this,” adds Anil Sharma, CMD Amrapali Group and vice president of CREDAI-NCR.