Shapoorji Pallonji buys 20 acres in Delhi for affordable housing project

While the deal size is unknown, land brokers estimated the value of the purchase to be over Rs 150 cr

Prime Minister Narendra Modi on Saturday reiterated his government’s promise of providing every poor person, whether living in rural or urban areas, a house by 2022. Whether this ambitious target will be achieved and by when remains to be seen, but Delhi-NCR is about to get a new affordable housing project being built by a private firm, according to reports. 

Shapoorji Pallonji Group's real estate arm, Shapoorji Pallonji Real Estate, will be building a 2 million-square feet affordable housing project on 20 acres of land it bought near the Dwarka Expressway in New Delhi from builder BPTP Ltd, Livemint reported on Tuesday while citing sources familiar with the development. According to the sources, the affordable homes will be built under the real estate firms's Joyville brand. 

According to the report, Gurugram-based BPTP, which is in the process of settling all its dues to foreign investors JP Morgan Chase and Co and Apollo Global Management LLC by March 2018, will use the proceeds from this sale to pay off the last tranche.

While the deal size is unknown, the report said that land brokers estimated the value of the purchase to be over Rs 150 crore.

In January of 2016, Shapoorji Pallonji forayed into the affordable housing segment by launching a separate vertical under the brand 'Joyville', which will build low-cost residential units across the country. The company joined hands with Standard Chartered Private Equity, International Finance Corporation (IFC), and the Asian Development Bank (ADB) for investing in the segment. The partnership will invest about $250 million, which will be used primarily for buying land, to meet project approval and initial infrastructure expenses.

As reported earlier this month, according to a recent survey, as many as 62 per cent of the new launches in the real estate sector during the January-June 2017 period were in the affordable housing segment. 

According to a report by Anarock Property Consultants, the affordable price segment dominated the residential units supply in the first half of 2017 (H1 2017).

"The recent new launches trend shows that demand for affordable housing with ticket sizes in the range from Rs 5 lakh to Rs 40 lakh is continuously growing," the report said.

During the first half of the year, the top seven cities – Bengaluru, Chennai, Hyderabad, Mumbai, Delhi-NCR, Pune, and Kolkata – recorded more than 60 per cent of total residential units supply in the affordable segment.

"The majority of projects in the affordable housing segment were launched in the peripheral boundaries of the top cities, largely due to non-availability of contiguous land parcels for large-scale mass housing developments and skyrocketing property prices in the central locations of our cities," it said.

Last Thursday, the Centre announced a new Public Private Partnership (PPP) policy for affordable housing that allows extending central assistance of up to Rs 2.50 lakh per house to be built by private builders even on private land. 

As reported earlier, the two PPP models for private investments in affordable housing on private lands include extending central assistance of about Rs 2.50 lakh per house as interest subsidy on bank loans as upfront payment under the Credit Linked Subsidy Component (CLSS) component of Pradhan Mantri Awas yojana (Urban). Under the second option, central assistance of Rs 1.50 lakh per house to be built on private lands would be provided, in case the beneficiaries do not intend to take bank loans.

Addressing the 'Real Estate & Infrastructure Investors Summit-2017' last week, Minister of Housing and Urban Affairs Hardeep Singh Puri stated that eight PPP options, including six for promoting affordable housing with private investments using government lands, have been evolved after extensive consultations with states, promoter bodies, and other stakeholders.