Bud­get Sops Lure Premium Real­tors to Af­ford­able Space

BUILD­ING UP Avail­abil­ity of funds at lower cost, in­crease in flat size ma­jor at­trac­tions

The Economic Times - - Companies: Pursuit Of Profit -

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.

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