Realtors line up with projects

Buoyed by Budget, Tatas, Shapoorji Pallonji, Puravankara to launch more affordable housing projects

Developers of affordable housing such as Tata Housing, Shapoorji Pallonji Real Estate, Puravankara, and others are looking at launching more affordable housing projects after Finance Minister Arun Jaitley provided a number of sops to boost budget housing.

Besides according infrastructure status to affordable housing, which will help the companies access cheaper funds, taxation benefits and other government relaxations, the minister said that under the profit-linked income tax deduction for the promotion of affordable housing, the carpet area instead of a built-up area of 30 and 60 square metres would be counted.

"The provision allowing liability to pay capital gains tax in the year the project is completed for joint development agreements will bring in more landowners to partner with us, leading to a boost in affordable housing projects in the near future," said Brotin Banerjee, managing director and chief executive at Tata Housing.

Banerjee added that the company would continue to launch new phases in its existing projects, it would also seek new land parcels at the periphery of Mumbai, NCR, Bengaluru, Chennai and cities across the country.

Tata Value Homes, a subsidiary of Tata Housing, develops affordable housing projects across the country with over 40 million sq ft under development.

Venkatesh Gopalakrishnan, president (business development) & chief investment officer, Shapoorji Pallonji Real Estate, said the proposal to include the carpet area instead of built-up area in profit- linked income tax deduction would help developers and the company was encouraged to launch more affordable housing projects.

Currently, the company is developing three projects and is in active negotiation to buy five more land parcels.

Ashish Puravankara, managing director of Puravankara Projects, said the company would aggressively look at launching more affordable housing projects after the relaxations announced in the budget. "The fact that industry status and extension of time period for availing tax benefits has been provided only to affordable housing clearly indicates the focus and direction of the government on the multiplier effect this sector can have on the economy," Puravankara said.

Puravankara will be focusing on Chennai, Bengaluru, Hyderabad, the Mumbai suburbs and Pune.

Till date, Puravankara 's budget housing arm Provident has committed investment of Rs 6,000 crore of which Rs 2,500 crore has been spent, with the balance to be incurred over the next 24-36 months.

Brick Eagle, an investor and incubator of low-cost housing, would look for more projects, thanks to the budget, said its founder and chief executive, Rajesh Krishnan.

He said plans were already under way to launch five projects this year in Coimbatore, Pune, Khopoli (Mumbai), Kasara (Mumbai) and Alwar.

Easy Finance:

Bankers and developers feel that developers can access more funds now at lower costs.

"Developers of affordable housing can access external commercial borrowing. EPFO funds can come into this segment and insurance companies can invest in these projects since they are classified as infrastructure," HDFC Chairman Deepak Parekh told a television channel on Wednesday.

Brick Eagle's Krishnan said earlier it was a struggle to secure bank loans for affordable housing projects because banks could not differentiate between affordable housing and other real estate projects and they had already maxed out on commercial real estate.

"Banks should now be more open to affordable housing projects as it is in the infrastructure bucket. Also, they can consider longer tenor loans at lower costs, similar to infrastructure loans. Infrastructure status could also mean a more favourable debt-equity ratio," he said.

According to Puravankara, since infrastructure falls in priority sector lending, it will lead to lower cost of borrowing and a longer time period, which are the need of the hour. "The reduction in borrowing costs can be passed on as a lower selling price to the customer, thereby curbing speculation as well," he said.