The government has backed its Housing for All by 2022 promise with a slew of reforms for buyers and developers alike.
The Indian real estate sector has seen a resurgence of interest in 2017 after a slowdown over the past 2-3 years, buoyed by the affordable housing segment, which includes residential units below Rs 50 lakh. Legislations the like Real Estate (Regulation and Development) Act, 2016, (RERA) and Goods and Services Tax (GST) have signalled that the government is ready to walk the talk for its ‘Housing for All’ by 2022 promise and many developers and institutional players have flocked to the affordable housing market, a report by Colliers International India, the Indian wing of a global commercial real estate company said.
“Most institutional players are looking at affordable housing as a ‘mid-margin and quick turnaround’ product to ensure reasonable returns,” Gagan Randev, National Director, Capital Markets and Investment Services, Colliers International India said. This has been made possible with speedy government approvals and incentives to end-users (especially the first-time home buyers living in rented accommodations to motivate them to own their own dream home), he added.
Here are some of the key highlights on India’s push for affordable housing:
- The long-awaited infrastructure status to the sector under the Finance Bill 2018, is expected to allow builders easy access to capital at economical rates, clearer investment guidelines and greater transparency.
- The government has tweaked the definition of affordable housing projects to pave the way for 100 per cent tax subsidy on profits of an affordable housing undertaking.
- Arms of established players like Shappoorji Pallonji Joyville and Tata Value Homes, etc, which have rebranded themselves to cater to this mass and exciting segment, Colliers said, noting that it has also drawn institutions and funds like HDFC Capital, IFC, Standard Chartered, Kotak Investment Advisors etc.
- The government has also addressed common grievances like the uncertainty of approvals taking too long, developers delaying possession with clearer investment guidelines and greater transparency under RERA.
- The new reforms are also attracting new entrants to the market like Tribeca Developers and sovereign funds like ADIA, which have lined up substantial commitments to the real estate segment.
- Apart from sops for the builders, the government has introduced a slew of benefits for home buyers such as allowing interest subsidy of 3-4 per cent for first time home buyers for loans up to Rs 12 lakhs and Rs 9 lakhs respectively under Pradhan Mantri Awas Yojana (PMAY).
- Many states have also introduced policies for affordable housing to buyers such as zero maintenance fees for five years and check on developers to ensure timely project completions.
- According to a recent study by property portal PropTiger, the affordable housing segment continued to have a higher share in total residential sales and contributed over 50 per cent to the total sales in Q3 FY17 across top nine cities of India.