Budget Sops Lure Premium Realtors to Affordable Space
BUILDING UP Availability of funds at lower cost, increase in flat size major attractions
Kailash Babar & Sobia Khan
Mumbai | Bengaluru: The Union Budget has given a fillip to the government’s efforts to boost affordable housing through tax incentives for developers and bigger brands known for premium projects are now entering the segment while existing players scale up their plans.
“The revival of real estate is expected to take place from bottom of the pyramid of low-cost and affordable housing. This has been the most unorganised segment in residential real estate so far. However, things will change for better now. Increase of the size to qualify for affordable units has made the entire thing more palatable,” said Shishir Baijal, CMD, Knight Frank India. “Availability of funds at lower cost will also bring down the prices when passed on to the consumers resulting in further demand growth,” he added.
Listed companies like Housing Development and Infrastructure (HDIL) and Sunteck Realty plan to enter value housing. Sunteck Realty said it would invest up to ₹ 1,000 crore over two years to develop these projects. Last week’s Union Budget proposed infrastructure status for affordable homes along with several other measures for the realty sector to step up ef- forts to provide housing for all.
“Now, cost of funds for developers will come down, which will translate into lower prices for buyers. We at Alpha Corp are exploring various opportunities in the segment,” said Ashish Sarin, director and CEO, Alpha Corp. The segment also has its own set of challenges, though.
“Affordable housing is a mass housing subject with lower margins and therefore requires management, engineering and cost efficiency with low overheads. Developers need to adopt a different skill set like a factory model because there may not be too much of price escalation in this category as the market is driven by end users. With our last eight years’ experi- ence in this segment, we have realised that this is more of a volume game than margins,” said Ashok Chhajer, CMD, Arihant Superstructures, a listed company. “The government’s infrastructure status proposal will give a much needed boost to the real estate sector. We are in the process of firming up ours plans to launch our maiden affordable project. We had huge success with our 7000 mid-income apartment project Dream Acres,” said JC Sharma VC & MD of Sobha Group.
“Given the tax incentives and other benefits offered by the government, home buyers in this category can expect up to10% benefit on pricing,” said Kamal Khetan, CMD, Sunteck Realty.