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HindustanTimes Sun,26 Oct 2014

Budget boost for low-end realtors

Sachin Dave, Hindustan Times  Mumbai, March 01, 2011
First Published: 21:24 IST(1/3/2011) | Last Updated: 21:26 IST(1/3/2011)

Many real estate developers across India who do not have a presence in the affordable housing segment may foray  if the “investment linked deduction” offered by the government on investment in the sector is substantial.

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Finance minister Pranab Mukherjee on Monday said, “Considering the importance of housing, I also propose investment linked deduction to businesses which develop affordable housing under a notified scheme.” However, the government has not yet announced the exact percentage of deductions. 

“We are waiting for the details of the specific notified scheme, as affordable housing is the need of the hour,” said Kamal Khetan, chairman, Sunteck Realty, a Mumbai-based company that is primarily in to high-end real estate.

At present, there is a demand of 24 million houses in the country and the deduction, in to affordable housing will accelerate investments in the segment said industry trackers.

“The deduction for developing affordable housing is an initiative that would see many developers moving to affordable housing,” said Pranab Datta, MD, Knight Frank India, a real estate consultancy.

As of now, not many developers are moving in the affordable housing segment despite growing demand because of lower margins. Many developers in the segment have been badly hit by the rise in the input cost. “The steep rise in the cement cost would affect all developers but our margins are smaller. Especially when houses are booked three years in advance and by the time of delivery the prices have gone up,” said Uday Dharamadhikari, CEO, Usha Breco Realty, a Mumbai based firm in to affordable housing.

Apart from this, the developers in this segment are also complaining about how very few PE players are willing to investment in the projects due to comparatively lower returns.


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