What happens to unsold housing stock?
Additional housing stock created by smart cities will add to the existing unsold inventory of 7 lakh units
Developers around the country are currently grappling with a huge unsold stock of 7 lakh units. What happens then to the additional housing stock created as part of the area-based development (ABD) plans as part of the Smart Cities Mission?Won’t it just add to the numbers?
About 89% of the ₹ 48,220 crore to be invested in the first 20 smart cities will be spent on the built environment that will include urban development and housing. According to a white paper recently released by The Royal Institution of Chartered Surveyors (RICS) titled Urban Make over: Evolution or Revolution? the top three cities investing in the built environment include Bhubaneswar, Indore and Jabalpur. Indore expects to construct 1.94 million sq m and Jabalpur 1.97 million sq m of green buildings space.
Though it’s too early to forecast how much additional housing or commercial realty stock will get created in the smart cities as part of ABD, planners will have to ensure that both mid-segment as well as affordable options are made available to buyers. This is important because most of the redevelopment is planned for areas located in the heart of the city and not in the periphery, thus making real estate expensive.
According to data available, Bhubaneswar will have 3,800 housing units with an average area of 1,000 sq ft for government staff and four slum redevelopment projects with 6,000 housing units for low income households. AtAhmedabad, housing for about 8,000 slum dwellers will be developed and Coimbatore will have about 4,500 housing units.
Both Bhopal and Surat will leverage ₹ 1,000 crore from real estate under ABD. Both cities will also have to set aside 15% of housing stock for the economically weaker scheme, says Amit Bhatt, strategy head, urban transport, EMBARQ India.
₹ 1,000 crore will be used in Bhopal as seed capital and ₹ 1,500 crore will be leveraged from the private sector when shops and housing will be built on the 100 acres of greenfield project. Redevelopment will create real estate that will be amortized to raise money for development of the city, says Bhatt.
Jitesh Brahmkshatriya, general manager, head, master planning, Tata Consulting Engineers Limited, says that smart cities planning to create housing and commercial stock to raise revenue should keep in mind the affordability aspect.
About 89% of the 48,220 crore to be invested in the first 20 smart cities will be spent on the built environment that will include urban development and housing.