Won’t get a home below Rs20 lakh in city

Although the interest rate subvention package by bankers has brought some hope to home buyers, the realty players in the city are no mood to express any happiness.

At present, Mumbai does not have enough supply of 1BHKs. A cluster of developments which have come up across the city offer minimum super built-up area of 850-1,800 square feet (sft) with carpet area (the actual usable area) around 635/900 to 1,566 sft.

Developers and consultants say it would be difficult to build homes within the range of Rs20-35 lakh in the city.

Anshul Jain, chief executive officer (India) of international property advisory firm DTZ, said, “Affordable housing is not an economically viable option in tier I cities as most of the land was acquired by developers in last three years.”

Jain explains this stating that with an estimated construction cost of Rs1,000 per square feet (psf), for a 1,000 sft residential unit to cost Rs20 lakh would need the converted land to cost less than Rs800 psf, including floor space index (FSI). But most of the land area today costs much higher than this. “This is the reason that we see little supply of new projects,” he said.

This indicates that the impact of the relief package by bankers on middle class buyers of tier I cities would be minimal. Oberoi Constructions, the city-based premium category residential developer believes that the volume game is not the way out for them.

Vikas Oberoi, managing director, Oberoi constructions, said, “We are bringing down our prices from Rs1.5 crore to Rs1 crore to Rs75 lakh. With escalating land prices and our kind of projects, we have nothing to offer for Rs25 lakh.”

Though the company has not seen any growth in sales, Oberoi feels that if the realty market stabilises in the middle income housing category and demand starts picking up, buyers for high-end properties will also turn up. “Our next launches would happen in March-April, till then we will complete our under-construction properties in Kandivli, Goregaon and Andheri,” said Oberoi.

Even those who are developing affordable housing projects feel that creating homes for throwaway prices is not possible within city limits. Mayur Shah, managing director of the Marathon Group, which has a premium residential project in Lower Parel and mass housing project at Badlapur, said, “We are going to put up our medium segment projects in Mulund, Kandivili and Borivili, for 3BHK in the range of Rs80 lakh to Rs1.2 crore.”

Shah said that affordable housing projects are viable outside the city precincts and the company is announcing a slew of projects in this range. “We are looking at Panvel and other locations for developing homes in the size of 160-225 square feet.” Even Nirmal Lifestyle, headed by Dharmesh Jain, is now getting out of the city limits to focus its business on the affordable housing segment.

Jain said, “Today we don’t have any project in the affordable housing segment, but from the second quarter of the next fiscal, we plan to develop projects in the price range of Rs20-40 lakh and we request the government that it should look at several brackets for metros in the range of Rs20 lakh to Rs40 lakh for the urban middle class.”

Nirmal Lifestyle at present has projects in Mulund where the selling price is approximately Rs10,350 psft with a minimum carpet area of 725 sft.

pooja_s@dnaindia.net