Tax exemption could lure the developers to construct affordable housing
What was speculated earlier that the developers will not show much interest in the low budget housing as the profit margins are low is not true. Modi’s election manifesto stated loud and clear that the government will provide housing for all by 2022 and will eradicate slums completely especially in urban and semi-urban areas.
This initiative has created excitement among the players in the cement and steel sectors, as well as real estate developers. The Urban Development Minister M Venkaiah Naidu is holding talks with financial institutions, real estate developers and other stakeholders to make this dream a reality.
However the real estate developers are concerned as since the profit margins in the low income group housing is low, any delay will create a lot of burden and hence are demanding for a single window clearance. Lack of marketable land parcels, high cost of construction, lack of information and excessive control on development of land are some of the areas which need to be looked into which might create hindrance in the long run and jeopardise the entire initiative.
RK Arora the CMD of realty firm Supertech mentioned that even though the developers feel that this initiative will revive the housing sector, they are hesitant to initiate affordable housing projects mainly because of lower margins associated with the segment. If tax exemption is provided, then they might consider working on such projects.
Mohit Goel the CEO of Omaxe mentioned that their company is currently executing 42 affordable housing projects and tax subvention on housing or increasing tax exemption could spur demand.
Source- The Hindu Business Line
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