With private developers inclined to enter the sector due to access to lower cost credit for longer tenures and the various tax sops, the supply of affordable housing will witness an uptick, says Anshuman Magazine, Chairman, India and South East Asia, CBRE.
Is 'infra' status for affordable housing enough to spur financing by banks?
Yes, we believe that with the affordable housing sector being accorded infrastructure status, coupled with the area limit being increased, developers will now have greater access to low-cost funding for longer tenures, and hence will be inclined to get into this segment. Various cities, such as Gurgaon (Delhi NCR) have already seen developers foray into low-cost housing projects. The recent announcements in this segment mean that the earlier reluctance to launch projects due to smaller size and profitability constraints will ease significantly.
Is it a feasible proposition now for infrastructure majors to get into the affordable housing sector?
Most of the upcoming affordable housing projects are planned on the outskirts of major cities, where larger land parcels are available at cheaper costs. However, the downside to this is the lack of adequate social and physical infrastructure to support these projects. As developers begin foraying into this segment, there is an opportunity for infrastructure majors to support this development and become a necessary part of the next phase of India's real estate development.
How does infra status translate into incentives, special dispensation and bankability? What additional incentives would accrue to investors getting into this infra status-driven affordable housing initiative?
Providing infrastructure status to affordable housing will give the residential real estate market a much-needed boost. With private developers inclined to enter the sector due to access to lower cost credit for longer tenures and the various tax sops, the supply of affordable housing will witness an uptick. This, coupled with the increase in liveable area and interest subvention, means that end users will also consider investing in the segment.
How will the infra tag accorded to affordable housing spur the concept of 'Housing for all'? How will this impact realty pricing in the current fiscal and over the next four years?
Infrastructure status for the affordable housing sector was a long-awaited announcement. It is an important announcement which will promote access to priority lending, thereby spurring supply of low-cost housing units across various cities in India. Relaxation in area measurement and completion timelines to seek tax exemption will further encourage the participation of private players and provide potential homebuyers with a variety of options. Further, the government has also increased allocation under the PMAY scheme to spur development. With adequate supply expected to enter the market, the ever-increasing demand for residential real estate would get addressed, and we may see a rationalisation in prices in this segment in the future.