Chennai's property developers are gearing up to launch affordable housing projects in anticipation of a slew of fiscal sops in the forthcoming Union Budget 2017. Even leading developers are floating new entities to undertake affordable housing projects as there is a surge in demand, along with determination of the government to provide all-round support to the developers.
According to Shyam Sundar, founder of SSS Consulting, who is planning to undertake one lakh houses in the affordable housing category in Chennai, industry status to the housing sector in the Union Budget would provide the requisite thrust and encourage more entrepreneurs to undertake similar development. There are others like VNCT Ventures who are undertaking development of budget villas in the peripheral and suburban areas, relying on government's efforts to further reduce lending rate and enhance income-tax concessions to retail investors to own homes.
A survey in the Gulf by VNCT Ventures has revealed that there is an overwhelming demand for budget housing among blue-collared workers there. Any tangible fiscal sops in the budget would encourage them to enhance their investment in India.
Leading property developers in Chennai wish industry status to the housing sector as that will enable them access to low-cost funds to undertake more housing projects both in the affordable and luxury segments. More clarity on GST norms and implementation schedule and relaxation norms for REITs are other areas where they are hoping that the government's forthcoming budget would provide lasting solution and clarity on unresolved issues.
A number of property developers, who already own significant land in Chennai's suburban and peripheral areas, are rethinking on development plans to earmark a portion of the land for affordable housing development. The Prime Minister's announcement earlier on 4 per cent interest rate exemption up to Rs 9 lakh and 3 per cent exemption up to Rs 12 lakh has convinced property developers that the government is keen to enlarge the area of fiscal sops for affordable housing. This trend has convinced more developers to enter into the affordable housing development, including leading developers to earmark a portion of their portfolio.
The demand by LIG and MIG is likely to account for 76 per cent of the total demand for housing units between 2016 and 2010 in Tier-II and III cities due to greater migration into such cities generated by increasing employment opportunities. This is yet another reason for small and medium developers who wish that the budget should focus more on extending fiscal sops to affordable housing development by way of industry status, single window clearance and easing of norms for faster turnaround time of projects
