Realtors stay off from govt's low-cost housing projects due to low
returns
11/08/2014 08:40
The developers staying off from government's vision of "housing for all by 2022" i.e. low-cost housing projects due to regulatory hurdles, high land cost and low returns which makes such projects "unaffordable", reported PTI. According to the experts, presently, there is a shortage of 187.80 lakh dwelling units in urban areas, but this is not attracting developers to take up low-cost units as the sector is facing many challenges on the land acquisition front, soaring land and material cost and liquidity issues. Commenting on the development, PwC, Associate Director, Bhairav Dalal told PTI that, “The cost of project has significantly increased due to the delays caused which makes it unaffordable. Besides, increasing cost of land makes such projects economically less viable.” According to official data, 2,20,741 houses have been built in urban areas during the past three years under different programmes like the Jawaharlal Nehru Urban Renewal Mission (JNNURM), the Rajiv Awas Yojana (RAY) and affordable housing in partnership. Commenting on the issue, Kolte-Patil Developers, Chief Executive, Sujay Kalele told PTI that, "Developing a low-cost housing project in the current market conditions is challenging given the number of approvals needed before starting a project which increases the overall cost. Margins are very less, maximum 10 per cent, in this segment, but the costs are high which makes it unaffordable." "Banks lend at around 18 per cent while PEs expect returns of up to 23 per cent. Thus, in a project which is costlier than its returns, financing them becomes a major challenge," he added
11/08/2014 08:40
The developers staying off from government's vision of "housing for all by 2022" i.e. low-cost housing projects due to regulatory hurdles, high land cost and low returns which makes such projects "unaffordable", reported PTI. According to the experts, presently, there is a shortage of 187.80 lakh dwelling units in urban areas, but this is not attracting developers to take up low-cost units as the sector is facing many challenges on the land acquisition front, soaring land and material cost and liquidity issues. Commenting on the development, PwC, Associate Director, Bhairav Dalal told PTI that, “The cost of project has significantly increased due to the delays caused which makes it unaffordable. Besides, increasing cost of land makes such projects economically less viable.” According to official data, 2,20,741 houses have been built in urban areas during the past three years under different programmes like the Jawaharlal Nehru Urban Renewal Mission (JNNURM), the Rajiv Awas Yojana (RAY) and affordable housing in partnership. Commenting on the issue, Kolte-Patil Developers, Chief Executive, Sujay Kalele told PTI that, "Developing a low-cost housing project in the current market conditions is challenging given the number of approvals needed before starting a project which increases the overall cost. Margins are very less, maximum 10 per cent, in this segment, but the costs are high which makes it unaffordable." "Banks lend at around 18 per cent while PEs expect returns of up to 23 per cent. Thus, in a project which is costlier than its returns, financing them becomes a major challenge," he added
