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Will realtors' dreams collapse under govt's affordable houses?

Politicians & realty consultants agree to this, but developers disagree.

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While the state government plans to pour realty boon on state’s homeless residents, it threatens to submerge private developers’ dreams — a fact, however, they (realtors) deny at the moment.

To help lower income group (LIG) and middle income group (MIG) segments realize their dream of having their own roofs, the government plans to set up around 15 lakh houses in various cities and towns of Gujarat under its affordable housing schemes. However, while the initiative is poised to increase supply in the market, the move is also expected to create pressure on the realtors — which, city developers deny — stating that the government move will not have any adverse impact on the existing realty market.

As part of its 2012 assembly poll campaign, the Bharatiya Janata Party (BJP) had promised construction of 50 lakh affordable houses in the state — the first phase of which will see coming up of an affordable housing policy and building 15 lakh such houses. The Gandhinagar Urban Development Authority (Guda) has already launched an LIG scheme promising around 2000 units, while its Ahmedabad counterpart, the Auda, mulls on coming up with a similar scheme for the MIG segment in Khodiar area.

The state government plans to come up with residential units of up to 62 square metre built-up area costing up to Rs15 lakh. Private developers in the city supply around 40,000 residential units every year. Now, if the state government supplies around 5,000 to 10,000 units in the market, existing private players will be forced to cut down prices in the affordable segment, sources in market said.

The real estate market, which is already reeling under pressure for quite some time, may further be weighed down by the government’s ambitious plans. Real estate prices in the city are already beyond common man’s affordability, which is why the government wants to create pressure on the private developers to bring down the prices, said one of the chairmen of urban development authorities in the state.

Meanwhile, the Gujarat Housing Board (GHB) too has woken up from its decade-long stupor to launch one scheme each at Vadodara, Rajkot and Surat.

GHB too had earlier announced launching schemes for LIG, MIG and HIG in Ahmedabad, which, however, did not see the light of the day.

GHB chairman, Jayanti Barot voiced a similar view. He said: “The public sector housing will definitely create adverse impact on the real estate sector up to certain extent.” The real estate consultants also agree to this view. “With announcement of public housing schemes, customers sitting on the fence are likely to postpone their decision, which will spoil the market sentiments,” said Kishor Dedhia, managing director of consultancy firm Space Management Ltd.

The consultants believe that it will push the market to a wait and watch situation and major land deals may not take place. “However, all depends upon how fast the government acts,” said Dedhia.

On the other hand, the real estate developers believe that the government is catering to that segment of buyers that is not the target group of private developers. “It is a good move by the state government to come up with affordable housing schemes for the LIG. However, it will not have any impact on private developers,” claimed Rushabh Patel, president of Gujarat Institute of Housing and Estate Developers (Gihed). Chairman and managing director of Galaxy Group, Uday Bhatt too agreed that the government’s plans to build units below 80 sq mtr, is not the target size of the private developers.

The Gihed chief, however, raised the issue of inadequate land for public housing schemes. He said that the government does not have enough land to come up with public houses in huge numbers. “Moreover, it will be difficult for the state government to provide housing at low costs owing to high construction costs,” Patel said.

Home theatre?
The state government plans to come up with residential units of up to 62 square metre built-up area costing up to Rs15 lakh.

Private developers in the city supply around 40,000 residential units every year
If the state government supplies around 5,000 to 10,000 units in the market, existing private players will be forced to cut down prices in the affordable segment.

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