India Investment Property

After low-cost airlines, budget hotels, cheap cell phones, low-cost computers et al, it’s now time for branded low-cost houses. Delhi-based real estate major Omaxe is planning to invest Rs 8,000 crore in next five years in affordable housing projects. The company has floated a subsidiary National Affordable Housing and Infrastructure which will be building the affordable houses. In all, Omaxe plans to build about 10 lakh low-cost houses.

Omaxe CMD Mr. Rohtas Goel, said, “We are investing from the internal accruals. Going forward, we will also look at SPV level equity from India and abroad”. The company is also looking at slum redevelopment model to build affordable houses. For this, proposals have already been sent to the state governments of Delhi, Madhya Pradesh, Punjab and Rajasthan. The company has earmarked Rs 200 crore for slum rehab projects. Such projects will help Omaxe in acquiring land at a cost which will make development of affordable or low-cost houses a feasible option.

For affordable or low-cost houses, it has already acquired land in Neemrana, Ghaziabad and Lucknow. Mr. Goel said,“The land for the affordable housing projects will cost us around Rs 100-200 per square feet depending on the city, while the cost of construction will be Rs 700 per square feet. The units will be sold at Rs 1000 to1100 per square feet”. The first project, in Neemrana, will be launched after three months and will be completed in a span of 2-3 years.

The company plans to build low-cost houses on slum land. However, analysts believe that it might not be a very feasible model. Mr. Anuj Puri said, “Slum rehab is very popular in Mumbai. Real estate developers are now eyeing a similar model in other cities too as land is becoming scarce and expensive. But it’s tough to make profits if low-cost houses are made on the balance land as slum dwellers need to be rehabilitated for free and developer needs to cover that cost which can be done only by making luxury apartments”.

In Mumbai realty developers such as HDIL and Akruti City have developed slum redevelopment projects. Omaxe has also launched an international design competition for efficient and economical structural design and optimum space utilization. It has also tied up with the London School of Architecture.