Bangalore: Ten months after the Maharashtra government announced a scheme for 500,000 rental homes in five years to fight a housing shortage and an expanding slum population in Mumbai, the results are starting to show.
Many top developers have applied for the scheme primarily to avail the additional incentives the state is offering. Developers such as Akruti City Ltd, Dosti Group, Acme Group and Ecohomes Constructions Pvt. Ltd were recently shortlisted for the programme by the Mumbai Metropolitan Region Development Authority (MMRDA). The firms are currently getting development approvals for the projects.
On Tuesday, Housing Development and Infrastructure Ltd (HDIL), the country’s fourth largest developer, announced it would build 43,000 homes on a 525-acre land that was earlier earmarked for large townships in Virar, a northern suburb of Mumbai.
“We have received 30 applications and are still scrutinizing the rest,” said an MMRDA official, who didn’t want to be named as he is not authorized to speak to the media.
MMRDA estimates an annual rental income of Rs700 crore once the 500,000 homes are ready. Monthly rents for the 160 sq. ft homes would range from Rs800-Rs1,500.
So far, only four developers—Nirmal Lifestyles Ltd, Dhanashree Developers Pvt. Ltd, Matheran Realty Pvt. Ltd and HDIL—have been awarded working contracts for the scheme. Under the programme, developers get additional construction rights that they can use in their commercial component of the development in return for building rental houses for free on another portion of the land. The rental houses will have to be handed over to MMRDA.
Akruti, which will launch a rental housing project in Thane, plans to target mid-income buyers for the commercial component. “We will price it between Rs30-40 lakh, a segment where there is demand,” said Vimal Shah, managing director of Akruti.
“The 525-acre land belongs to us and we will price the free-sale component depending on market trends. We don’t require to raise funds as of now for construction,” said Sarang Wadhawan, managing director of HDIL.
The firm recently got regulatory approval to raise $600 million (Rs2,826 crore) through a qualified institutional placement, which allows promoters to raise funds by selling shares to institutional buyers such as banks without involving retail investors. HDIL has a land bank worth about Rs2,500 crore but also has debt amounting to Rs4,000 crore.
Despite the Union government’s push, no other state has yet initiated similar rental housing schemes. “We have been impressing upon states and developers to build rental homes for both middle and low-income groups and as a tool to fight urban migration, but nothing much has been done,” Kumari Selja, minister for housing and tourism, told Mint on Monday. Building slum-free cities is high on the new government’s agenda, she said. “Rental and affordable housing are crucial means to achieve this target and we are working towards it.”
HDIL’s involvement will boost the government’s scheme, said housing expert V.K Phatak, adding that rental housing is the only way out in a city that is restricted by the 62-year-old Rent Control Act. The Act protects tenants in some 40,000 buildings in south and central Mumbai from eviction and has frozen rents in these buildings at 1947 rates.