With the economy back on the recovery path, the concept of “affordable housing” appears to have outlived its utility.
With property prices escalating by 5-10 per cent in some plush locations of Kolkata in the past three months, houses above Rs 25 lakh are back in demand, according to real estate developers.
Last year, when the property market was in deep trouble, developers had started betting on volumes to overcome the sloth in demand. Aided with this, government's stimulus package was expected to give boost to the below Rs 20 lakh housing segment.
Taking cue from them, several small developers had also conceived such housing projects, particularity in suburbs.
However, issues of unavailability of land and poor connectivity with the city, along with rising input has come as a hindrance in executing them, said developers.
“Today, there are not many quality projects in the affordable housing category due to problems like lack of connectivity with the work place,” said Jitendra Khaitan of Pioneer Properties.
In the past three months, every month there has been a price appreciation in the range of 2-2.3 per cent in residential projects, according to Khaitan.
“There is huge demand for low-cost housing, and developers are also keen on it. However, the problem lies with the availability of land. The government also needs to provide certain tax breaks or land at concessional rate for the developers to build affordable housing projects,” said Santosh Rungta of the Rungta Group.
For a house of about Rs 2,000 per square feet, the cost of land comes at a minimum Rs 700 per square feet. “However, if the cost of house is itself Rs 700 per square feet, and cost of land sometimes exceeds Rs 700 per sqaure feet, it is not viable for a developer to sell houses at that cost,” said Rungta.
This apart, the suburban transport system in the city is yet to evolve for people to move to suburbs, added Rungta. Pradeep Sureka of the Sureka Group said rising input cost, particularity that of steel and cement, has added to the pressure on margins.
The group is planning to launch a residential project, prices between Rs 25-30 lakh in the by the end of this year.
Thus, except for big developers with national presence, developing low cost housing project for the masses is turning out to be challenge, especially when the other housing projects are back in demand.
