Land availability and simplified norms may make ARHC projects for migrants viable

G Balachandar | Updated on May 25, 2020

Existing lands of industrial units can also be tapped

The Central’s government’s plan to launch Affordable Rental Housing Complexes (ARHC) to provide social security and quality life to migrant labour and urban poor, among others, has evoked varied responses from the industry.

Recently, Finance Minister Nirmala Sitharaman announced, as part of stimulus measures, that a scheme will be rolled out for migrant labour/urban poor to provide affordable rental accommodation, a move aimed at getting migrant workers back to the cities, when economic activities resume.

Concessionaire model

Niranjan Hiranandani, National President, NAREDCO (National Real Estate Development Council) & Managing Director, Hiranandani Group, points out that the need for this segment definitely exists. Cities will need to provide such affordable rental housing for migrant labour as also urban poor, and the concessionaire model, where the developer can get rent — like toll collection by contractors who have built the sections on highways — is a workable revenue model.

Though the perception is that this segment has good potential, the authorities, as enablers rather than just regulators, will need to simplify the norms and fast-track the procedures that are happening, these ARHC projects will definitely see quick launches,” he adds.

Absorbing existing stock

But Anuj Puri, Chairman, ANAROCK Property Consultants, feels that the government’s approach and availability of land would be crucial for these projects to take off.

The land would need to be available to developers at affordable cost, since the main cost of real estate is land and affordable housing must, by definition, remain affordable, he says.

Various government agencies do have sizeable land parcels, which could be made available to affordable housing developers. Government-run development bodies like MHADA and HUDA could be appointed for this task after creating a fast track for the creation of such housing.

“The government could consider absorbing the considerable existing stock on the market and deploying for this purpose. It would be a win-all solution for all concerned,” Puri adds.

However, M Govinda Rao, Chief Economic Advisor, Brickwork Ratings, is of the view that incentivising manufacturing units, industries, institutions, associations to develop such complexes on their private land can help them access labour without much difficulty because converting government-funded housing in the cities into ARHC under PPP mode through concessionaire may take a long way to materialise.

“Getting migrant labour back to the cities for construction work will be a big challenge. Enterprises may not find it attractive to find land and construct affordable houses, in the prevailing uncertain environment. Their focus will be to start the stalled productions and restore the supply chain.

Construction companies are facing low demand and the extension of lockdown in major cities has caused a delay in completing their projects. In this environment, real estate developers focus more on completing the projects that are already stuck, rather than investing money into the new projects,” he states.

But in real estate, there is no ‘one size fits all’ answer. While the announcement was by the Centre, land is a State subject. So, again, the norms under which implementation will happen will have to be notified by each State government — too many variables to analyse and quantify an answer.

The Covid-19 pandemic has highlighted the sufferings of migrant labours and hence the creation of affordable rental housing stock may ensure that the human crisis witnessed in all major cities during the lockdown, vis-à-vis urban poor and migrant labour, may not happen again.

Published on May 25, 2020

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