Low cost housing plans bite dust
Prime Minister Narendra Modi’s vision of “housing for all by 2022” may turn out to be a difficult mission to accomplish. The developers are not showing much interest in the low-cost housing projects citing regulatory hurdles, high land cost and low returns making such projects non attractive and difficult to maintain.
Currently, there is a shortage of 187.80 lakh dwelling units in the urban areas. However this number is not attracting the developers to take up low-cost units as the sector is facing many challenges. The land acquisition is difficult and the soaring land and material costs have made it more unattractive. The developers face liquidity issues, and they feel that these budget homes will not fetch much return on investments which is not worth the effort.
PwC’s (Pricewaterhouse Coopers) associate director Bhairav Dalal stated that the cost of the projects has significantly increased due to the delays caused which makes it unaffordable. Besides, increasing cost of land makes such projects economically less viable.
Developing a low-cost housing project in the current market conditions is challenging as the number of approvals needed before starting a project is very high. This increases the overall cost of the project. Hence the government should look at creating a single window for all the clearances and should introduce e-governance to avoid delays in approvals.
A maximum of 10 % margin can be earned via these projects and these projects will becomes lucrative to the developers only when they get a chance to develop these budget units in bulk. The approvals delay the projects at various stages and the rampant bureaucracy and bribery in this sector make it difficult for the developers. Kolte-Patil Developer’s chief executive Sujay Kalele also echoed the same sentiment.
Source- Financial Chronicle
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