Jerry Rao's housing project gathers steam

Affordable housing is not a reactionary trend to economic recession in the real estate market. Rather, it is increasingly being seen as an altogether separate space in this vertical.

Bangalore-based Value and Budget Housing Corporation (VBHC), promoted by Jaithirth Rao, former chairman of Mphasis and P S Jaykumar, former head of consumer banking at Citibank among others, today launched their first project ‘Vaibhav’ in the affordable segment, indicating the business interest in this segment.

“Our business model is about value housing at affordable rate and we plan to build 1 million houses in the next 10 years,” J Rao, chairman of VBHC, said.

Housing Development Finance Corporation (HDFC), which has a 10 per cent holding in VBHC on entity level, has also linked funds for its upcoming projects, he added.

As per company sources, portfolio management company (PMC) of HDFC holds close to 49 per cent in the present project worth Rs 110 crore.

“HDFC had taken close to 49 per cent in some of our upcoming projects on special purpose vehicle (SPV) level,” P S Jaykumar said.

The present project of the private limited company will be spread across 16.1 acres with close to 1,900 apartments. While the cost of the apartment will vary from Rs 4.5 lakh to Rs 12 lakh, there will be facilities like schools, water harvesting structures inside the premises.

Jaykumar also said that the present project was expected to complete in next one year.

The company is also planning to come up with new projects in national capital region (NCR), Chennai, Hyderabad in the next phase.

“We hope to launch three projects in next one year in various cities of the country,” Jaykumar said.

There is a requirement of around 25 million houses by the middle and lower-middle class people in urban India.

However, there are very few real estate companies having projects to cater to this segment.

“There is a need of value housing on affordable rate in urban India and we need more of these projects to cater to the housing need,” Deepak Parekh, chairman of HDFC said.

There should be more transparency as far as built up area is concerned, he added.

The company is not only concentrating in tier-I cities, but also planning to enter into the tier-ii cities.

As per company officials, the company is planning to enter into tier-II cities like Nasik, Baroda to tap this market.

However, higher land cost and delay in getting government clearances are the obstacles in the growth path of the company.

“These issues have to be addressed by the company to get good operating margin from project,” Rao said.