AFFORDABLE HOUSING. April 2018 I Volume 32

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1 AFFORDABLE HOUSING April 2018 I Volume 32 1

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5 Change in Housing Prices Prices rose in 32 of 50 cities in the index, were stable in 13 and declined in five in FY17 68 One year data represents price gains from Q to Q One year data represents price gains from FY13 TO FY Vizag Howrah Chennai Pune Gurugram Vadodara Bengaluru Indore Delhi Kochi Navi Mumbai Mumbai Hyderabad Kolkata Lucknow Vijayawada Tiruvananthapuram Greater Noida Jaipur Patna April 2018 I Volume 32 5

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7 The Indian property market has received $3.15 billion from various investorsin the first half of the current year. The funding for Infrastructure development has almost doubled from Rs 9,850 crore perannum $ 1.3 trillion housing boom is set to be the country s next growth driver. April 2018 I Volume 32 7

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9 Granting infrastructure status to affordable housing will enable easy and dedicated access to institutional financing, higher limit on external commercial borrowings will attract more investments and assure sustained growth of affordable housing in India, making it the core driving segment for real estate. This will lower the financing rates thereby reducing the cost of construction. This will allow developers to pass on the benefits to the buyers. The new status will increase the resource allocation for the sector, catalysing housing supply and reducing the supply gap. The carpet area of 30 and 60 sq. m (excluding public areas such as lifts, corridors) will be counted instead of built up area to ensure homebuyers got value for money. The 30 sq. m limit will apply only in case of municipal limits of four metropolitan cities while for the rest of the country, including peripheral areas of metros, the limit of 60 sq. m will apply. This will effectively serve to increase the number of projects falling under this segment and offer larger affordable housing units to buyers. The credit linked subsidy through PMAY will play a critical role in providing subsidized credit facilities to consumers in the lower income group. The revised interest subsidy provided to the first-time buyers of middle income group will increase the number of people eligible for receiving credit linked subsidies pushing the demand for homes in this segment. Under the Digital India initiative, the government has stressed upon the need for modernization of land records, which aims at ushering in the system of providing online access of land details and plugging of loopholes. This will push the integrated land management system to bring in more transparency in the whole system as well as expedite the process of land acquisition and enable holistic growth. The increase in time frame for completing the projects under affordable housing from three to five years indicates that the government acknowledges the problems faced by developers in the sector. The plan to scrap stamp duty for affordable housing to reduce the cost for buyers. The buyers from economically weaker sections to the society will be offered interest rate rebate by the centre making it more attractive for consumers. With stamp duty varying between 4 to 8 percent across states, this move will act as an incentive for the consumers to purchase their own homes. April 2018 I Volume 32 9

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12 Mixed- Development Cross subsidized Housing : Government land to be allotted based on number of affordable houses to be built on the plot offered to private builders, cross subsidizing this segment from revenues from high end house building or commercial development. DBT Model: Under this option, private builders can design, build and transfer houses built on government lands to public authorities. Government land is to be allocated based on the least cost of construction. Payments to builders will be made by the public authority based on progress of project as per agreed upon milestones and buyers will pay to the Government. Annuity-Based Subsidized Housing: Builders will invest against deferred annuity payments by the Government. Land allocation to builders is based on unit cost of construction. Annuity-cum-Capital Grant Based Affordable Housing: Besides annuity payments, builders could be paid a share of project cost as upfront payment. 6 Direct Relationship Rental Housing: Recovery of the costs by builders is through rental incomes from the houses built on government lands. Direct Relationship Ownership Housing: As against government mediated payments to builders and transfer of houses to beneficiaries in the above four models, under this option, promoters will directly deal with buyers and recover costs. Allocation of public land is based on unit cost of construction. 12 April 2018 I Volume 32

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19 Villas Phase 1 April 2018 I Volume 32 19

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