FSI, after adding his costs, would not be able to sell at less than Rs 4,000 per sq ft.
Pravin Doshi, chairman of Acme Housing
Irani: The solution then is to increase FSI, create that fund and use it to create infrastructure or subsidise construction for this sector. Take the government’s scheme to increase the FSI to 4, use FSI of 1 for the kind of houses they want.
Chatterjee: We raised the issue for EWS/ LIG. But, with MIG, the segment we belong to is left in the lurch. Where does that sector go? They cannot go to Mhada or to the private developer.
Oberoi: Why not bring in size and price restrictions? If you build 30% of houses and sell at a certain number, then you get this XYZ benefit…
Chatterjee: You were earlier up in arms against government control. Now, you want control.
Naik: If we give the right product at right prices, we find customers. We are a marketing company. Let me ask the developers here — what percentage of profit should a developer earn?
Irani: Depends… if it is guaranteed at 20% of profits, that would do.
Naik: If we are talking about 20% as reasonable profit, then two years ago, we were selling a flat at Rs 4,000 a sq ft at Andheri and now, it is Rs 15,000. Land cost was same. Add construction cost of 1,500 a sq ft. At 20%, then the cost should be Rs 6,000-7,000.
Oberoi: I am ready to do that if you replenish my land at the same rate I bought it.
Naik: Take another example — Virar, where flats, including those of Boman, are still selling at Rs 10-15 lakh. Two years down the line, the land cost would have been the same.
Irani: No. My holding cost and replenishment cost would have changed.
Naik: Let me give you two examples. In Thane, a developer started selling at Rs 3,000 per sq ft and increased it to Rs 7,000 a sq ft. In October, the market crashed... He started a new project in the next compound at Rs 3,200 a sq ft. He’s still making money at that rate. If he can make money at Rs 3,200, and why go up to 7,000? I do not agree that affordable housing should start at Rs 2,2,00 a sq ft. Tata Housing is the biggest example, which started its project at Boisar at Rs 1,385 a sq ft and sold 1,200 homes in one month. If they could construct with land and infrastructure, sell at this low rate and make profits, anyone can do it. We launched a project in Nagpur at Rs 1,200 a sq ft with a reasonable profit. We sold it all in a week’s time.
Banerjee: Lots of affordable housing has come in the market. One benefit of economic recession is that many good projects have come in. The problem would be for developers who have bought land at high prices. Even land owners have become saner in their price demands. If this drought continues and the economic doesn’t improve, then next Diwali you may be able to buy a house at an affordable rate.
Irani: Prices have rationalised about 20-30% lower. Developers have become wiser and are not in a hurry to increase prices. The housing stock has improved. Four to five developers have launched housing projects which are affordable rates above Rs 1,500 a sq ft. I would think this is the right time to buy.
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