With the Lok Sabha election coming to an end, the state government has planned to take up its long-pending proposals dealing with floor-space index (FSI).
With the Lok Sabha election coming to an end, the state government has planned to take up its long-pending proposals dealing with floor-space index (FSI), jantri (the state government’s ready reckoner to calculate land prices) and township policy. Sources in the government claim that if changes in the aforementioned connections are brought about, homes will be more affordable, with a 10 to 20 per cent drop in prices.
For example, in the case of a person planning to buy a two bedroom-hall-kitchen (BHK) flat in Satellite costing Rs20 lakh, if the state allows the builder free FSI, the buyer can avail the benefit of between Rs4 lakh and Rs8 lakh. The reason for this is that the cost of land for any developer forms around 40 per cent of the scheme. This implies that the cost of the 2-BHK flat will be between Rs12 lakh and Rs16 lakh.
Sources in the urban development department (UDD) said that it planned on announcing the revised jantri rates by June-July, resulting in a rate reduction in almost all areas. In addition, there is a possibility that FSI may be made free or paid FSI may be made cheaper.
In this time of economic slowdown, with most potential buyers holding out for a better situation, developers see a ray of hope - the possibility that the government will enact positive changes so that it will be able to pass on the benefits to the end users.
“The state has been thinking on these lines for a very long time. However, if it is now ready to reduce the jantri rates and increase FSI, making it free or reducing the charges, it will allow potential buyers to gain benefits amounting to nearly 20 per cent of the prevailing market rates,” Prashant Shah, president, Gujarat Institute of Civil Engineers and Architects (GICEA), said.
There is a huge dearth of affordable homes in Ahmedabad and by increasing the FSI, the amount that developers need to spend reduces, thereby making the land cheaper for the buyers. The government should also consider special tax-free schemes for developers constructing home for the lower and lower-middle income groups, said Shah, and that this will encourage builders to build more affordable homes for them.
Some developers believe that apart from the UDD, the Gujarat chief minister can help to establish positive sentiments in the real estate market by giving the green signal to these proposals.
“The real estate industry is waiting for the go-ahead from the chief minister in the form of clearance of the FSI proposal and township policy,” said Jaxay Shah, president (Gujarat chapter), Confederation of Real Estate Developers’ Associations of India (Credai).
Rough estimates place the yearly demand for homes at 50,000 to 1 lakh, with affordable homes forming the majority of this, followed by 2- and 3-BHK houses for the middle income group.
“According to our calculations, around 40 per cent of the total demand will be for affordable housing in the Rs5 lakh to Rs7 lakh slab; followed by 2- and 3-BHK flats costing between Rs15 lakh and Rs20 lakh, with a 30 per cent share,” said Hitesh Shah of Space Management Ltd. The rest is comprised of high-end homes, villas, bungalows, luxurious apartments and more, he said.
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