Mahindra plans affordable houses up to Rs 10 lakh

Business conglomerate Mahindra & Mahindra plans to make an entry into the affordable housing segment with homes priced up to Rs 10 lakh across many cities in the country.

"We are seriously considering launching affordable houses. Currently, we are carrying out a study on development of affordable homes," Mahindra Lifespace Developers Chairman Arun K Nanda said on the sidelines of the Global Initiative for Restructuring Environment and Management (GIREM) summit here.

He, however, declined to share further details such as when the company will launch the first such project and what could be the size of the investment involved.

Mahindra Lifespace Developers is the realty arm of Mahindra & Mahindra and presently caters to the middle and high-end housing segment. It is developing various projects in the National Capital Region, Chennai, Mumbai and Pune. It has already completed many projects in these places.

Addressing the GIREM summit, Nanda said: "The definition of affordable homes varies between different developers. As per our definition, we are targeting to build houses up to Rs 10 lakh in larger cities and for Tier-II and III cities, it will be in Rs 5-7 lakh range."

The company is planning to develop houses with sizes varying between 400 square feet and 450 sq feet, he added.

"We are targeting a construction cost of Rs 700-800 per square foot and it is possible as we are working with an efficient batch of engineers," Nanda said.

The most important thing in implementing such a project is to have discipline in construction, as the country's "construction industry is the most inefficient industry and it has to change the construction methodology to move ahead with the times," he added.

Talking about the locations, Nanda said the company is looking for areas that will have better connectivity with employment opportunities.

He also urged the government to create infrastructure and help developers acquire land at low prices to offer affordable houses.

Talking about the affordable housing projects, GIREM President Shyam Sundar S Pani said: "This is the only solution for poor people, but nobody is touching this segment in a big way because of land prices, delays in policy decisions and construction costs."

The low-cost homes should be built with sizes of 500-700 square feet that will carry price tags of Rs 5-7 lakh, he added.

On the draft Land Acquisition, Rehabilitation and Resettlement Bill, 2011, Nanda said: "It is a reaction to what has happened in Greater Noida. It is a big problem if it is done with a political agenda."

When asked about rising interest rates, he said: "The government is trying to bring down inflation by raising interest rates, but it has not happened in the last one year. Now we should look at something else."

The Reserve Bank of India has hiked key policy rates 12 times since March, 2010, to tackle rising inflation, but without much success.

"Interest rates are hikes to curb demand, but we should look at the supply side too... Brazil had reduced interest rates when they had high inflation. It is wrong to reduce supply at such times," Nanda said.