While affordable housing segment is
in the limelight, generating some demand in an overall sluggish real estate
market,low-cost housing, essentially for the low income group and economically
weaker sections,appears to be making little headway. The Government has
estimated a shortage of about 25 million houses in urban area at the beginning
of the Eleventh Plan, of which 97% is in the low income group. Mumbai has seen
a few launches in the last couple of months.
The Maharashtra Housing and Area Development Authority, which put up 3,863 flats in the affordable segment, received
a tremendous response for its offering. But then, the number on sale was
miniscule compared to the over four lakh applications it attracted.
The good response for its initial offer
of 1,000 units of Tata Housing Project at Boisar, has made the company to raise
the number to 1,300.For this project, within three weeks, the company sold
16,000 forms for 1,000 homes, of which 7,200 filled the forms returned with an
earnest deposit of Rs.10,000.For each apartment, 7.2 customers have shown
interest.The apartments, in the 283-465sqft range, cost between Rs.3.9lakh and
Rs.6.7lakh. The company has tied up with Micro Housing Finance Corporation to provide easy finance to its customers.
The company is planning to launch
another low-cost project in the central suburbs of Mumbai. It is also bidding
for nearly 15,000 such low-cost homes in Bangalore, the National Capital Region
(NCR) and other places in the next four years.The company is targeting Rs.100-150crore revenue and an offer of 1,000-1,500 flats at each project. The company
is targeting revenue of Rs.700crores from low-cost housing in the next four
years. 50% of the revenue in the housing segment will come from low-cost
housing and the rest from mid-income projects.
According to the Managing Director
and Chief Executive officer, of the company the land cost is a major issue and
it should be understood that low-cost housing is high in volume with lower
profits compared to high end formats. When it comes to joint ventures, the
philosophy of the landowner should be in harmony with that of the company.Housing
Development and Infrastructure Ltd., has signed a joint venture agreement with the Mumbai Metropolitan Region Development Authority (MMRDA) to develop 525 acres
in Virar. The company intends to build and hand over 13 million sqft to the
MMRDA for rental housing and construct 39 million sqft for sale.
The project
would come under the affordable category and is scheduled for completion in six
years. In a recent development, DHFL Property Services Ltd.,a 100% subsidiary
of housing finance company of Dewan Housing Finance Corporation Ltd, tied up
with developers to market affordable projects for low-wage earners. It will
market a 2,400 unit project in Boisar. The apartments are of380-500 sq. ft. and
priced Rs.1300 a sqft Mr. B.K. Madhur, CEO DHFL Property Services, says the
company has always focused on enabling access to home ownership for the lower and middle income groups across India through our mortgage finance company DHFL.
The company intends to launch similar projects in other far-flung Mumbai suburbs
such as Virar, Karjat and Badlapur, besides promoting such ventures in Ahmadabad,
Chennai and Hyderabad in the coming months.
Buyers of affordable housing can avail
themselves of bank funding. But then, the affordable housing segment also brings
in certain unique limitations with it. In the case of mid to high-end housing, most
buyers can readily produce proof of income, whereas only about 50% of buyers in
the affordable housing segment would be able to do so.
Matheran Realty, among the first to launch low-cost homes in the price bracket of Rs.5-7lakh in Karjat, which is 100 km
from Mumbai, says its buyers are finding it difficult to get finance. According
to Mr. Pravin Banavalikar, CEO, though his project has been pre-approved by 10 banks,
only about 250 of over 1,800 applicants who sought loans have received sanctions.
Mr. Ashutosh Limaye, Associate Director
Strategic Consulting, Jones Land LaSalle Meghraj, says high land cost is a deterrent
for developers to offer affordable homes. Otherwise, low-cost housing, especially
in the metros, is virtually a risk-free proposition.Importantly, even in affordable
housing, a developer would have certain minimum profit expectations and if the
cost of land does not make these expectations feasible, there is no incentive
for the developer to venture into the low-budget home segment.
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