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Can the public sector fulfill Delhi’s housing needs?

Building 16 lakh housing units in the Capital, as per Delhi’s Master Plan 2021, will not be easy unless the land pooling policy is fast tracked

real estate Updated: Jul 16, 2016 12:00 IST
Most housing units being constructed by public sector agencies will be sold at market price and allotted through a draw of lots.
Most housing units being constructed by public sector agencies will be sold at market price and allotted through a draw of lots. (iStock)

vandana.ramnani@hindustantimes.com

Delhi Development Authority’s (DDA) housing schemes have all along been a big draw for people wanting to buy property at affordable rates in the Capital. This week, there were reports of Delhi Metro Rail Corporation (DMRC) planning to throw open a similar scheme for the general public.

Another public sector undertaking, The National Buildings Construction Corporation (India) Ltd, is currently working on projects in Karkardooma and Sanjay Jheel for DDA and has launched two projects in Gurgaon. Earlier this month, the Cabinet approved the redevelopment of seven General Pool Residential Accommodation (GPRA) colonies of which NBCC will redevelop Sarojini Nagar, Netaji Nagar and Nauroji Nagar.

Now the question is, will these agencies on their own be able to achieve the targets set in the Housing for All by 2022 Mission or will the private sector have to create stock? The requirement of 16 lakh units for Delhi, as per Delhi’s Master Plan 2021 seems to be quite a task given the fact that DDA has just created around five lakh units in the 49 years since its inception. In such a scenario the only solution to the housing shortage can be offered by fast tracking the languishing land pooling policy and the huge redevelopment potential that exists within the Capital.

DMRC

The agency has identified two plots near the Metro stations in Okhla and Janakpuri, where it plans to construct 93 and 350 units, respectively. The 2BHK and 3BHK units will be sold at the market price of Rs 80 lakh to Rs1 crore and will be allotted through a draw of lots. DMRC has earlier constructed residential apartments in Dwarka, Yamuna Bank, Saket and Shastri Park for its employees. “DMRC intends to develop a plot of 11,280 sqm at Janakpuri (West) under Transit Oriented Development (TOD) norms. The concept plan for this plot is ready. It will have approximately 300 flats of different sizes in addition to mandatory EWS. DMRC will also construct about 5,000 sq m of commercial area on this plot. A scheme will be launched to sell these flats directly to the public/government organisations/government PSUs by inviting applications,” DMRC sources say.

Another plot near the Okhla Metro station is being developed under TOD norms where DMRC intends constructing 93 flats and developing a commercial area. These flats and commercial areas will be directly sold by the DMRC, the sources say.

NBCC

NBCC (India) Ltd had earlier launched two real estate projects and constructed around 1,500 units in Gurgaon’s Sector 37 and Sector 89. Possession in the first project will be given in September this year and the company is awaiting the completion certificate for the second. It also plans to construct 166 units in Faridabad’s Sector 41 and three projects in Ghaziabad – one in Govindpuram with 152 units and two in Koyal Enclave, with about 200 units.

The public sector agency is currently constructing 6,252 units in Delhi NCR and 28,965 units are in various stages of planning. The NBCC model of housing is redevelopment as is the case with the government housing project being constructed in East Kidwai Nagar. Revenues generated by selling commercial space in the Netaji Nagar, Sarojini Nagar and Nauroji Nagar redevelopment project will be utilised for construction.

“We will sell the built-up properties. It means we will construct offices and residential units and part of the offices will be sold in the market to generate the money. The money collected from the sale will be used for the construction,” says Anoop Kumar Mittal, CMD, NBCC.

The agency is also developing a greenfield project for DDA in Karkardooma (75 acres) and in Sanjay Jheel, where it has been given the mandate to develop 25 acres. “For these projects, architects have been appointed and the engineering work is being finalised. Designs will be ready in another three months after which they will be sent to DDA for its approval and then submitted to the local bodies. I expect work to begin by the end of this financial year, says Mittal.

As many as 8,600 units are expected to come up in Karkardooma and around 3,000 in Sanjay Jheel.

While most urban planners and real estate experts have welcomed the initiatives being undertaken by public sector bodies, some are sceptical. They fear that these agencies lack the bandwith or the track record to generate housing supply of as much as 16 lakh units as envisaged by Master Plan of Delhi 2021.

A K Jain, former commissioner (planning) DDA, is confident that 4 to 5 million units can be created within Delhi on existing land banks. “We have to optimise the potential of existing brown field areas. The fact that multiple agencies are looking at residential development in the city is good and this ‘competition’ should be encouraged,” he says.

Ramesh Menon of Certes Realty and a Master Plan expert is of the view that public sector undertakings do not have the bandwith to meet housing supply targets. “DMRC may at best be able to construct 1,000 units but that is primarily to monetise its land assets. Constructing dwelling units is not their core business, infrastructure creation is their mainstay. If they have now decided to construct housing stock and open it to the public they are doing so only to monetise surplus land. The housing stock expected to come up is only a drop in the ocean,” he says.

DDA has so far been able to deliver only about four lakh units since its inception, NBCC can deliver over a 1,000 units and DMRC perhaps the same number. What is required is a supply surge of affordable housing stock and that can come only in a free market. Dependence on government agencies for creation of housing supply to meet the supply-demand gap is not the solution. The land pooling policy has to be fast tracked, Menon says.

About 15,000 acres in the capital are held by various government departments on which almost one lakh units can come up but that again will not be able to meet the shortfall of 4 lakh dwelling units.

The 25% vacancy rate in existing colonies is also a problem because the units are not affordable.“The only way to pair demand and supply will be to allow the private sector to create five times the average supply generated by DDA and other agencies through the process of land pooling, incentivised redevelopment and participation of government agencies through monetisation of land assets (for example, railways alone has around 700 acres),” says Menon.

The gross land under land pooling is around 57,000 hectares, which is around 1,40, 850 acres. Master Plan 2021 has envisaged a requirement of 16 lakh units for Delhi alone. What this means is that around 10 lakh units will be created under land pooling. The balance is expected to be generated through the redevelopment opportunity.

As for affordability, over and above housing to be constructed by private developers, they would also have to hand over 15% EWS stock to DDA. These would typically be 400 sq ft to 1,100 s q ft units priced at Rs 10 lakh to Rs 25 lakh.

“As many as two to three lakh affordable units can be constructed under the land pooling scheme. Public sector agencies can at best meet a fraction of this total demand. DDA should become a regulator facilitating this development and track the private sector’s delivery record,” Menon adds.