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| Edited By: R N Bhaskar |Source: DNA |Updated: Mar 19, 2018, 06:16 AM IST
You’ve been quite active in the affordable housing segment lately. Can you throw some light on this?
We’ve been selling houses for as low as 1,450 per square foot at Boisar near Mumbai four years ago. We sold houses at Rs 1,600 a sq ft at Vashind near Kalyan, and at Rs 1,700 at Ahmedabad.
What was the share of land in your total costing?
Not much, and it wouldn’t be computable. This is because we took the land at Boisar four years ago on a joint development basis with the owners as co-promoters. That way we reduced our risk in making an upfront cash payment for the land. But if you look at affordable housing, I think the land cost should be around 15-20% of the total project cost. But the bigger cost is construction and development of infrastructure, which can take 65-70% leaving us with a margin of just 15-20%. And what many people do not realise is that each additional year of delay in getting the requisite clearances reduces our margin by almost half.
How do you view affordable housing?
Tata Housing has a separate entity known as Tata Value Homes, which is a 100% subsidiary exclusively focusing on value and affordable housing segments. Tata Value Homes has introduced two pan-India brands for this purpose – Shubh Griha, which concentrates on the value homes segment and New Haven, which targets the affordable housing segment. In Boisar, for instance, we offer affordable housing but in the form of an integrated township. It goes beyond merely providing a home with its concept of the 'neighborhood and community'. It offers an unparalleled range of amenities and experiences -- such as a balanced mix of buildings and open spaces, quality lighting and ventilation for all apartments, large, centralised and accessible open spaces, recreational facilities, a hospital, school and a community hall, among others. But what is crucial to affordable housing is scalability and profitability. Nobody will take up any venture if it is not profitable. But offering affordable housing, and living with wafer-thin profits is possible, provided there is the ability to predict. Unfortunately, when there are delays in getting clearances, the unpredictable element comes in. That is when costs go up, making the concept of affordable homes a riskier proposition that normal real estate development.
What is your wish-list for the government?
Ideally, we should have some sort of single-window clearance, subsidised loans for purchase of land, and if possible where the government comes in as a co-developer. In the last case, the government brings in the land, and the selected developer then goes about developing it along agreed specifications and timelines. The selection of the developer could be through a transparent process, and care should be taken to ensure that it does not lead to speculative play. The penalties for any infraction on either side could also be spelled out. For urban centres the FSI needs to be increased to a minimum of 1 (instead of the current 1.33). Unless there is land or space availability, how will housing ever become affordable?
How many homes have you built so far?
We are in the process of building 20,000 homes, of which 3,500 have already been handed over. This year, we should be handing over another 2,500. And the rest should be ready for possession by 2017-18.
