Although many new trends were witnessed in the real estate sector in India in 2018, the year could well be regarded as the ‘Year of Affordable Housing’. Key reforms such as RERA, GST & the Benami Transactions Prohibition Act as well as the government’s policy initiatives like the Credit Linked Subsidy Scheme (CLSS) under Pradhan Mantri Awas Yojana (PMAY) gave a big push to affordable housing during the year, leading to the revival of residential real estate in the country, says Pradeep Aggarwal, Chairman and Co-Founder, Signature Global, and Chairman of the National Council on Affordable Housing, ASSOCHAM. In an exclusive interview with Sanjeev Sinha, Aggarwal speaks about the resurgence of affordable housing, its role in reviving the sector, and the prospects of real estate in 2019. Excerpts:
After two years of turbulence and subdued performance, it was a rewarding year for the sector, with housing being in the spotlight. As key reforms of RERA and GST settled in and their short-term disruptive impact was greatly eliminated, residential realty witnessed signs of revival, with affordable housing being in the driver seat. This despite the fact that the sector faced liquidity crunch, precipitated by the NBFC crisis which has now been contained to an extent by the government’s pro-active policy measures.
As it was a year of end-user driven realty, developers realigned their working strategies in line with the real demand. And as a result of that, there was a healthy uptick in new launches, with rising affordability leading to pick up in sales, especially in the high-potential affordable housing segment. Another factor which gave a fillip to residential realty this year was developers’ focus on projects’ completion and delivery. As a result of this, there was a substantial inventory of completed, ready-to-move-in projects in the market. This was lapped up by home buyers as they were not only saved from risking their investment in under-construction homes, but also had to pay lower GST of 12% in case of standard homes and 8% in case of affordable homes.
Reforms have played a significant role in rejuvenating the real estate sector, especially residential realty, which has been facing headwinds for the last few years. It is the result of reforms that the speculator/investor market has given way to the consumer market, with the end-users calling the shots. The government’s policy of providing substantial interest subsidy under PMAY has helped boost the demand for affordable and mid-segment housing which is the main driver of residential real estate today.
However, a few more hurdles need to be removed with the reformed policies. One of these big hurdles is the fund crunch. Since affordable housing can effectively help meet the target of ‘Housing for All’, the government should ensure that the funding needs of the sector is met. This price-sensitive housing segment has been sourcing funds on high interest rates from PEs and NBFCs. I have always been suggesting that the government should allocate a certain percentage of total bank funding for this segment. High transaction costs of affordable housing need to be brought down. GST of 8% and additional 6-7% stamp duty are too high. To ensure the faster completion of projects, the government should come up with pre- approved building plans. It is, however, heartening to note that the government is considering bringing down the GST rate on construction materials.
I believe the sector will do well in the coming year. I expect the economy and job creation to gain momentum. And with the government’s continuous focus on infrastructure and streamlining approvals and promoting ease of doing business, real estate should get the desired push. Affordable housing will continue to drive the residential real estate. With foreign funds and investors seeing big opportunity in the affordable and mid segment housing, one would see heightened activity in this segment. One would witness completion of lots of projects with the easing of liquidity. And finally, I look at 2019 as a year of consolidation, with real estate emerging as a sustainable asset class.
It was an equally rewarding year for us, both on the delivery and the new launches front. We were successful in delivering our first affordable housing project — Solera, Sector 107, Dwarka Expressway — four months ahead of government-mandated deadline of 48 months. We also launched 3 major projects. We made our foray in Uttar Pradesh with the launch of our first retail project — Signature Global Mall in Vaishali, Ghaziabad. We also launched Signature Global Roselia in Sector95 A Gurugram – a 2BHK development in around 3 acres.
So far as our future plans are concerned, living up to our motto of ‘Har Parivaar Ek Ghar’ (House for Every Family), we plan to emerge as the number one company in the affordable housing segment by developing one lakh homes in the states of Uttar Pradesh, Haryana, Rajasthan and Maharashtra by 2022. We are aiming for 50,000 affordable homes in Haryana, 25,000 in Uttar Pradesh, 15,000 in Rajasthan and 10,000 in Maharashtra.
We will have our twin focus on delivery and new launches. We hope to deliver our projects — Synera, Sector 81, Gurugram (824 units) and Andour Heights, Sector 71, Gurugram (980 units) in the coming year. Under the Pradhan Mantri Awas Yojana, we will be launching a big affordable housing project in Rajnagar Extension (Ghaziabad), offering 9000 lifestyle homes. Under Haryana government’s Affordable Housing Policy, we will be launching new projects in Sector-37 D, Sector 93, Sector 79, sector 63, Sector 89 and Sector 92. Apart from this, we will be launching Low-Rise Premium Floors under the Deen Dayal Awas Yojana of the Haryana government, spread over 30 acres in Sector 36, Sohna.