PUNE HOUSING OPPORTUNITIES AFFORDABLE TO LUXURY

Rohit Gera, Managing Director, Gera Developments Pvt. Ltd affirmed that in the present scenario, developer’s profit margins are very low in affordable housing. “The developers are now carving their niche in a particular segment of real estate. Specialization on particular real estate asset class is the big change.”

Neeraj Bansal, Co-Head & COO - India Global, KPMG in India added, “Only if the company has strong systems and execution skills, it will go for a wafer-thin margin segment of affordable housing. In the luxury segment, the risks are high but margins are attractive.”

Maneesh Yadav, CEO & MD, ASK Financial Holdings Ltd said, “Financers go by the specifics of the city, the particular asset class and the DNA of the developer. That is something which we look upfront. As a banker we are focused on the mass market and mid-market. Luxury is scary but still it is city and developer specific case.”

Anuranjan Mohnot, CEO & MD, Gruhas & Lumos Alternate Investment Advisors added, “Mid-market housing is relatively safer for investments in a city like Pune and property which has joint development is even safer as it is relatively easier to make the desired ROI. Luxury and low-cost housing projects are a big no for us.”

JK Bhosale, COO, Amanora stated, “Velocity of the product determines the profit margin. Mid-segment does better and that’s where the margins are high. In luxury the velocity is slow so, the margins get reduced with time. While, in mass housing there isn’t much money. Integrated townships is the segment, where the, ticket-size is good and the homebuyers, bankers and investors are happy.”

Aditi Watve, President - Pune, Anarock agreed, “Affordable housing classification is less than Rs 45 lakh in Pune and considering the typical capital value across the city, this has to change. But, considering the government regulations for EWS housing and ToD policy, developers are looking at smaller ticket size housing units in and around city centre.”

WHAT MORE CAN BE DONE

Anuranjan Mohnot- In low-cost housing the prevailing model will have to change. Government should provide incentives through land availability and fast approvals. Like what it did for GIFT city. Then affordable housing can become affordable for masses.

Rohit Gera- Land in the city is not available at the price which makes homes affordable. There is a simple solution. For a developer who is willing to develop in city peripheral areas where land is cheap, the government should provide access roads, connectivity through public transport and other infrastructure needs. This will be a win-win situation for all stakeholders.

Aditi Watve concurred with the idea, “With such policies in place, the land prices in city peripheral areas too will go up but, the quantum of land supply that will come in, will keep the prices competitive and reasonable. The supply dynamics will keep the housing prices too, in check.

Maneesh Yadav- Last 15 years we have been dealing in equity and credit kind of structure and this is the first time we are coming up with affordable housing fund of Rs 1500 crores unheard of in the last 10-12 years. The challenge always has been the land and the rightful developer to partner. Help from the government can change affordable housing into a scalable model.

Neeraj Bansal- In other countries, government supports rental housing projects. When you are able to create a strong rental housing supply, the availability of homes gets created as these housing are subsidised to a certain extent and therefore attractive. In cities like Mumbai, the land prices are so high you just can’t build affordable homes. We need the efficiency of private developers, policy incentives from the government and the support of financial institutions in terms of low interest regime.

JK Bhosale- When you are developing a township the entire shift is towards average realised rates. The infrastructure and facilities provided gives 10-15% premium. But, it’s more about the lifestyle aspect. The taxation benefit has to come back whether it is GST, stamp duty, home loan rebates, etc.

WITH THE REGULATIONS THAT HAVE COME UP, FOR THE A-GRADE DEVELOPERS THERE IS LOT MORE LEVEL-PLAYING FIELD IN SOME WAYS EVERYONE HAS TO FOLLOW COMPLIANCES NOW.