Page 14 - CO JAN 2020

COVER STORY

by 2022.’ The latest measure is the grant of the `20,000-crore immense pressure and struggling to accommodate the ever-
stress fund that would particularly benefit developers of affordable growing migrant population.
housing projects that are stuck owing to last-mile liquidity issues.
Budget allocation
In this year’s budget, the government also increased the tax The Housing for All and Smart Cities missions, through convergence,
deduction limit on the home loan interest component to `3.50 use the benefits given to each other and also compensate for
lakh for units priced within `45-lakh budget. The rate of goods and shortcomings by leveraging their advantages. While Housing
services tax (GST) has also been brought down to one percent for All concentrates on funding and incentives for developers
for affordable housing projects. Additionally, home loans are and buyers, the Smart Cities mission focuses on leveraging land
available to borrowers at record low interest rates currently as the availability, implementation under single entity SPVs (Special
Reserve Bank of India (RBI) has brought down its lending rate to a Purpose Vehicles), and strengthening basic infrastructure facilities.
nine-year low of 5.40 percent. Further, barring Hyderabad, property As a part of the Smart City initiatives, some Indian cities have
rates in most prime markets have undergone a correction in the planned convergence with the Housing for All scheme to address
past half-decade.
the informal housing sector. Some of these initiatives would include
The Federation of Indian Chambers of Commerce (FICCI) housing for economically weaker sections or affordable housing,
estimates that by 2050, the country’s cities would witness a net slum redevelopment, rental housing, working women’s hostels,
increase of 900 mn people. Furthermore, over 2012-2050, the shelters for the homeless, etc. All these would be developed
pace of urbanization is likely to increase at a CAGR of 2.1per through the PPP model with the involvement of private developers.
cent - double than that of China. The cities of India are under There is a huge opportunity for private developers to get involved
in the development of housing for the informal sector.
PPP in Affordable
The real estate sector in India underwent considerable changes
post the global liquidity crisis. Downturn and liquidity crunch forced
A special window to provide last mile developers to adopt a two pronged strategy - smaller units and at
funding for housing projects, which are
non-NPA and non-NCLT and are net worth lesser prices. This oriented developers to focus on the Affordable
positive in affordable and middle class Housing segment, which has become the buzz word in the real
housing to be set up. estate market over the last few years.
NIRMALA SITHARAMAN, FINANCE MINISTER
During 2009-12, real estate developers in the country launched
projects in the affordable segment across cities, with units priced
between `5-10 lac (USD 10,000 - 20,000). The fundamental
strategy that PPP’s revolve around as an implementation strategy

14 CONSTRUCTION OPPORTUNITIES|JANUARY 2020