Вы находитесь на странице: 1из 3

Affordable Housing Drive Hits a Hurdle

Rising input, labour costs put pressure on realtors margins; cos opt for mid-tohigh end projects
SOBIA KHAN & ANURADHA HIMATSINGKA BANGALORE | KOLKATA

Homes for the low-income group have run aground with buyers in that category, mostly from the unorganised sector, unable to get home loans even as builders grapple with rising costs of debt, land, labour and construction. Plans of several builders to launch affordable housing projects are increasingly getting reengineered and replaced by midto-high end projects, which yield more returns. More than half-a-dozen builders including Ahmedabad-based Bakeri Group, Evershine Builders, Kalpataru Group, Lodha Developers and Indiabulls Real Estate have either pulled out of the affordable-housing segment or have changed their offering. People belonging to the informal sectors are not coming out to buy homes; the buyers are from higher socio-economic background than originally anticipated, Pramod Kumar, chief operating officer at Value & Budget Housing (VBHC), said. Houses for the low-income category are tagged at . 6 lakh or less. It is a challenge to offer products at this price point unless low-income housing gets recognition from all stakeholders namely banks, builders and suppliers, Mr Kumar added. According to PropEquity, a property research firm, between 2009 and 2011, costs of construction material have grown nearly 25%. Steel, cement, bricks and labour constitute nearly 73% of the overall cost of an apartment. Daily wages of labour have gone up from . 250 a day in 2009 to . 325 a day in 2011. Value & Budget has sold some 1,000 units of their Vaibhava project in Bangalore in Phase-I, but has slowed down the roll-out of Phase-II as it is redesigning the project. Some builders like Bakeri Engineering and Infrastructure have shelved their lowincome housing project Shreeram Nagar as they werent able to find buyers for these homes. It is very difficult to get buyers for such projects as there are no formal income and ID proofs, such as pan card, to avail loans, said Anil Bakeri of Bakeri Engineering. In the Eleventh Five Year Plan, housing shortage in urban India is expected to be 26.53 million units. The total home loan disbursed in the last fiscal was around . 1,70,000 crore, affordable made a mere 0.1% of the total loan given out by banks. Bakeri has now moved out of this segment and is focusing on houses in the range of .

35 lakh and 3 crore due to better margin. Others like Bangalore-based Janaadhar Constructions low-income project Janaadhar Shubha are getting delayed due to payment irregularity by buyers. Builders such as Indiabulls, Keystone Rustomjee and Lodha have increased the prices of their affordable ventures by 15-30% due to huge overhead costs and lower margin. Indiabulls Greens project in Mumbai initially sold flats at . 2,200 per sq ft in 2009 and subsequently in other phases at . 4,500 per sq ft in 2011. Keystone Rustomjees Urbania at Thane was launched in 2009 at . 3,000-4,000 per sq ft and in subsequent phases at . 5,000-6,000 per sq ft. Many luxury builders who entered this segment did not do well. They walked into affordable housing segment more out of compulsion than strategy, said Gulam Zia, national director, research & advisory services at property consultancy Knight Frank (India). A Knight Frank research on affordable housing states that the middle-income population in Bangalore will require approximately 3.27 lakh housing units by 2011, which assuming an average unit size of 800 sq ft translates to approximately 262 million sq ft of residential space. Long clearance and high land cost for setting up low-cost housing projects are forcing developers to revisit their projects. We are not able to complete the project. The conversion of land is taking 12-15 months, which is increasing project cost by 20%, said Nayan Shah, managing director of Neptune Enterprises. The Mumbai-based company is setting up an 18,000units lowincome housing project in Kalyan in Mumbai. In the first phase, it had launched only 3,500 units. Neptune decided against building low-income projects in Mumbai due to spiraling land cost there. Since last year, fresh launches were conspicuous by their absence because mid-to-high end was still selling well. Considerable hype around affordable housing when the economy tanked in 2009 raised expectations for a huge supply. However, Indias economy picked up ahead of most others and it did not take long for developers to reconsider their options, said Ashutosh Limaye, local director for strategic consulting at Jones Lang LaSalle, India. We are not looking at this segment and would establish ourselves in the traditional housing finance market where credit trend is established and documented, said Anil Kothuri, chief executive officer, Edelweiss Housing Finance (EHF). The housing finance arm of Edelweiss Group currently invests only in projects upward of . 40 lakh. Many in the industry feel that low-cost housing needs to be a larger movement in the country. The concept has caught on in West Bengal primarily because of the initiatives being

taken by the state government. West Bengal Housing Board has entered into joint ventures with developers in Kolkata to offer housing to various sections of the society. WB state government provides land to the joint venture realty firms at a price lesser than the actual market price. Though margins are low, with profit-before-tax hovering between 10-15% per project, we decided to go into it because of the social responsibility each business house has, said Kumar Sankar Bagchi, managing director of Bengal Peerless Housing Development.