The Andhra Pradesh Government’s decision to relax building norms for large housing projects and levy shelter fee for housing of the poor is expected to boost the real-estate business.
Developers say the changes augur well for the sector. No new project applications were made during the last 18 months due to an order which realtors believe was a retrograde step.
The Government Order in January last year made it mandatory for all projects on one acre and more to reserve 20 per cent of the area for lower-income-group housing.
Cess better, say builders
Builders resented this move and wanted the Government to relax this mandatory provision. Last week, a new order was passed which relaxes the earlier order. The relaxed norms permit builders to provide land within 10 km of the project or within five km of Greater Hyderabad Municipal Corporation area for housing for lower-income groups.
Mr Prem Kumar, President of Andhra Pradesh Real Estate Developers Association, said that the move brings great relief to developers as no new project was applied for in the last 18 months. But a new provision has been provided in the form of shelter fee, which the developer has to pay.
“However, as a representative of builders’ community, we will seek to communicate with the Government that instead of levying shelter fee, they could consider some sort of cess as is done in other sectors. Such a cess will broad-base the collections and also help achieve the objective of developing housing for poor,” he said.
Mr M.P.Agrawall, Managing Director of Koncept Ambience, said, “The Government has changed the impractical order and we had to make several representations through various associations, including Credai (Confederation of Real Estate Developers' Associations of India) to convince the Government about the need to bring about change.”
“A close analysis shows that the Government is passing on to builders its responsibility of providing housing for poor in urban areas. The government has access to funds through various projects and schemes, including JNNURM (Jawaharlal Nehru National Urban Renewal Mission), and land. Therefore, who better to handle housing for poor than the Government. The earlier order delayed at least 50 large projects,” Mr Agrawall said.
This will impact the availability over the next few quarters, he felt.
BUYERS’ MARKET
Mr Patnaik D.R., General Manager, Ramky Estates and Farms, said, “The Hyderabad market has passed through tough three years where sentiment was down due to agitation and general business environment.
“But lately things are getting better with potential buyers stepping out to acquire properties. Yet, it is still a buyers market.”
Mr S. Pochender, Chief Executive Officer of Lanco Hills, said that demand for projects below Rs 50 lakh is good but buyers in the Rs 50-60 lakh and above range are cautious about purchases. They continue to wait and watch.
The market is coming out of a tough phase where prices had come down and were in fact stagnating. But the cost of inputs had gone up. Significantly, there is appetite for good housing projects which are rightly priced and close to busy centres.
Therefore, the demand for our project, located near the IT hub, is good, he said.
Nri demand
With the rupee weakening, a lot of new purchases are coming from the NRIs who see value in properties here. The prices had come down and the values are attractive for people to acquire new properties, such situation may not last long as buyers will have to factor price hikes, Mr Patnaik said.
Referring to Hyderabad’s real estate potential, Mr Agrawall said that the sentiment of buyers from other States is affected due to prolonged agitation and their concerns about investments. If they have choice they end up opting for other locations — be it Pune, Bangalore or Chennai. The prices in Hyderabad are still attractive and one can see costs are much higher in places such as Nagpur and Pune.
But the infrastructure in Hyderabad and the potential the city holds will continue to attract investments as people know that this is one of the hottest destinations, Mr Agrawall said.
Generally, speculative buying firms up prices. With hardly any speculative purchase for sale later, the prices continue to be steady, realtors said.