Expensive land, high financing costs
and multiple approvals is keeping many real estate players away from affordable
housing projects. Pranav Ansal, Vice-Chairman, Ansal Properties and
Infrastructure Ltd, said that meeting the target of Government’s ambitious
scheme ‘Housing for all by 2022’ is
be close to impossible, despite the positive sentiment in the industry after
the BJP came to power.
Ansal added that no big developer
enters affordable housing sector due to high land costs. “We have no plans of
doing it unless the Government changes some bye-laws or give some benefit such
as higher floor area ratio (FAR),” he said. According to Government estimates,
the housing shortage in India is close to 18.78 million, 97 per cent of this is
in the economically weaker section and low income group.
Urban Development Minister M. Venkaiah
Naidu has maintained that the Government is banking on private participation
and an interest subvention plan would be announced soon with the new housing
mission. But, real estate players say that interest cost is only part of the
problem. Raj Gehlot, Chairman, Ambience Group, said, “FAR needs to be hiked and
infrastructure needs to be in place to accommodate higher FAR.”A recent Cushman
& Wakefield study revealed, launches in affordable housing segment dropped
by 52 per cent in eight cities in third quarter of 2014 as against the
corresponding period last year.
Rohit Raj Modi, President, CREDAI- NCR,
said, “The Government needs to address the double taxation on land component,
as stamp duty is paid by the developer when he purchases the land and also by
end buyer. In order to make affordable housing lucrative for developers, the
state needs to give VAT waiver and Centre needs to reduce the excise duty.” He
added that a multi-agency committee should be formed to provide single-window
clearance. Builders argue that apartment costs can be reduced if the time taken
to get licenses can be brought down. On an average it takes 1-2 years to get
all clearances for a housing project
Some States such as Haryana have taken
steps to make affordable housing possible through the Affordable Housing
Policy, 2013, which has received several applications. Under this policy,
Supertech will be offering houses between Rs.12 lakh and Rs.20 lakh, while
Raheja Developers unveiled a project in Sohna offering 1,660 apartments priced
at Rs.3,600 per sq ft. Tata Housing too is developing townships under the brand
Tata Value Homes which offers affordable housing in Boisar, Vasind, Ahmedabad,
and Bengaluru. Brotin Banerjee, MD & CEO, Tata Housing Development Company,
expects the demand for affordable housing to increase by 20 per cent per annum
at least for the next decade. “The Government has already relaxed FDI norms inconstruction which will help in project financing. The sector now requires
introduction of key reforms and streamlining of the regulatory approvalprocess,” he said.
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