Due to the substantial increase in the cost of raw material, developers have been demanding that the state government amend the rate as projects were becoming unviable.
“The higher rates would encourage developers to undertake more affordable housing projects, increasing the supply of affordable homes. This development brings positivity to the sector and ensures that homebuyers have access to quality housing options,” said Pradeep Aggarwal, Founder & Chairman, Signature Global (India) Ltd.
As per the latest amendment, the rates prescribed in the policy for the hyper and high potential zone (Gurugram, Faridabad, Panchkula, Pinjore-Kalka) have been increased by Rs 800 per sq feet on carpet area over the previous rate which was Rs 4,200.
For other high and medium potential towns, it has been proposed to increase Rs 700 square feet while Rs 600 per sq ft will be increased for low potential towns.
“The most impossible factor for affordable housing developer is procurement of land. The cost of land which was earlier around Rs 6 to 8 crore per acre have increased to Rs 22 to 25 crore per acre,” said Pradeep Mishra, Founder, Homents Pvt Ltd. Selling price of affordable housing when it was launched in 2013 was Rs 4000/sqft and later it was increased to Rs 4200/sqft in November 2021.“Because of the increasing land cost, it was no more a lucrative and profitable venture for developers hence we started seeing the launch of affordable housing decreasing,” Mishra said.
The affordable housing policy was notified by the department on August 19, 2013. The objective of this policy is to encourage the planning and completion of group housing projects wherein apartments of pre-defined size are made available at pre-defined rates.
“By adjusting the allotment rates to match the increasing construction and development costs, the government has created a favourable environment for real estate developers to participate in the affordable housing segment actively. This decision will undoubtedly boost the confidence of developers, encouraging them to invest in affordable housing projects and contribute to the overall growth and progress of the state’s real estate sector,” said Rajjath Goel, Managing Director, MRG Group.
The whole ecosystem is driven by a demand-supply matrix.
Approximately 50 million people are estimated to be in need of affordable housing.
The developers get certain rebates under the policy and get to sell some commercial area to generate revenue.
“This policy amendment is a win-win situation for real estate developers and homebuyers. It creates a sustainable and inclusive housing market where affordable housing projects can flourish, and individuals and families can find their dream homes at reasonable prices,” said Ashwani Kumar of Pyramid Infratech.
