India`s realty sector is witnessing an increase because of the new initiative taken by the government to boost investor interest by focusing on rejuvenating infrastructure and supporting large-scale development of affordable housing across the country.
Maharashtra government`s IT/ITES policy is anticipated to build demand for commercial spaces and IT campuses in Navi Mumbai and Pune. In Navi Mumbai, IT campuses covering an area of 3 million sq. ft., is projected to come up in the next 3-4 years, and the new policy is expected to augment the absorption levels of these spaces. The increasing demand for affordable houses gives the private sector a prospect to explore urban affordable housing through various models that are profitable to all the stakeholders.
‘‘Housing for All’’ initiative, along with its ‘‘100 Smart Cities’’ mission and revival of large urban infrastructure projects will aid the sector to further grow. According to reports, the Ministry of Housing and Urban Poverty Alleviation, or MoHUPA, has identified 305 towns and cities for the “Housing for All” scheme quite recently. Identifying these urban centers will go a long way in meeting India`s housing requirements in the long-term.
The state government has announced the policy with incentives such as additional floor space index, exemption for IT/ITES companies from paying stamp duty, power to such units at industrial rather than commercial rates, along with additional subsidies on electricity tariffs and concessions on works contract tax and value added tax. Urban affordable housing has long been neglected in India due to various reasons such as high land prices, delays in getting approvals and low margins in the segment. Now with renewed focus from government, we expect this segment to gather momentum going forward.
The affordable housing segment that is now backed by a strong mandate of the central government currently witnesses a demand-supply mismatch and it is imperative that public-private-partnerships be given an impetus to achieve desired scale.
Mumbai is expected to witness the highest increase in demand for housing in the country over the next five years. Seven cities, that is, the National Capital Region (NCR), Mumbai, Bangalore, Chennai, Hyderabad, Pune and Kolkata will generate a total demand of 2.3 million residential units in this period.