MUMBAI: Realty developer EMGEE Group has acquired over 100 acres of land parcel near Mumbai as it forays into the affordable housing segment. The company plans to spend nearly Rs 1,600 crore to build 25,000 affordable homes over the next five years in the first phase.
“Affordable housing is the need of the hour and the current market scenario has established that demand continues to be strong in this segment. Our target is to build a total of 1 lakh affordable homes over the next 10 years,” said Mudhit Gupta, CMD, EMGEE Group.
The company has already procured development rights for 100 acres in Neral and Shahpur near Mumbai. The developer is also in advanced stage of negotiations for acquiring development rights of further 200 acres in the Kalyan-Dombivali belt.
EMGEE is planning to build these affordable homes in the price range of Rs 8 lakh to Rs 14 lakh with a configuration of 300 sq ft to 500 sq ft each unit, which will help home buyers in these projects qualify for benefits of credit-linked subsidy scheme under the Pradhan Mantri Awas Yojana (PMAY).
Under the Prime Minister’s vision of Housing For All by 2022, the government has announced various benefits including interest subsidy of up to Rs 2.2 lakh for homebuyers. Under the credit-linked subsidy scheme, beneficiaries of economically weaker sections (EWS) and low income groups (LIG) seeking housing loans would be eligible for an interest subsidy at the rate of 6.5% for a tenure of 15 years, or during the tenure of loan, whichever is lower on the initial Rs 6 lakh.
The construction work for the first phase of both projects in Neral and Shahpur is expected to commence in January next. While certain approvals including non-agriculture certification for the land have been received, the company is looking to launch the project after securing all the requisite approvals.
“The approval process has already started. But, we have always launched our projects only after getting permissions. We will be in compliance of RERA (Real Estate Regulatory Act) even if it’s being implemented after April 2017,” said Gupta.
The developer is looking to finance total expenditure of Rs 1,600 crore through internal accruals, construction finance and private equity capital.
“We are in advanced stage of talks with private equity funds for these projects. Based on the discussions, we can see that there is substantial appetite for affordable housing projects among institutional investors. We have negligible debt on our books and that allows us room to leverage for future growth,” Gupta said.
With increasing urbanization and rising demand for affordable housing for low income and economically weaker sections, the market for this segment is expected to touch over $100 billion per annum over the next 5 to 7 years, showed a study conducted by PwC, Naredco and APREA.
Given the shortage of homes in affordable category, the government of Maharashtra has proposed to use the salt pan land to build affordable and low-cost housing projects. It has set a target to build 1.5 lakh houses to relocate project-affected people and slum-dwellers, and also generate nearly one-third of the housing needs for middle and higher-income category through this initiative.
Credits ET Realty