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Business News/ Opinion / Online-views/  Money Guru | It’s best to invest in a project after construction starts
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Money Guru | It’s best to invest in a project after construction starts

Money Guru | It’s best to invest in a project after construction starts

Anil Sharma, chairman and managing director, Amrapali Group.Premium

Anil Sharma, chairman and managing director, Amrapali Group.

When the land controversy in the Noida Extension area of Greater Noida made news in 2011, Amrapali Group was the first to react to the issue by giving alternative locations and options to almost 3,000 homebuyers in their projects. The group’s chairman and managing director, Anil Sharma spoke about delay in the commencement of construction in the area. He also clarified doubts around the affordable housing segment during an interaction with Mint Money.

You are one of the key developers in Noida Extension area, where over 100,000 investors and homebuyers are now stuck with their investments due to the land controversy. What is the current status of the projects? When do you think the construction would resume?

Anil Sharma, chairman and managing director, Amrapali Group.

So is there a time limit for the matter to get resolved?

No, it is actually very difficult to predict.

Low entry price points were the main attraction for homebuyers and developers already had approvals, so people invested in advance. Looking at what happened in Noida Extension, when is the right time to buy in a project?

It is best to put in your money when the construction has begun on ground in any project. This is because this is the time when the developer will have all the necessary approvals in hand. At this stage, the property is also bankable and banks will also provide loan to the buyer.

There is no clarity on the affordable and mid-segment pricing band. What are the price bands for the two categories?

Price bands depend on location. In the mid-segment, prices may be according to the location. This varies across cities. However, an affordable housing is the one designed at a convenient location having low pricing with necessary infrastructure around the project. This could be uniform across the country.

Often, affordable housing is now seen as housing for the economically weaker sections (EWS). But how viable is it for developers?

In many states, it is mandatory for us to construct a portion of our project under the EWS category. States including Orissa, Chattisgarh and Haryana have this provision. However, this will not solve the problems of huge housing demand in the country. We need at least 15 times the current supply of EWS housing for meeting the demand in this category. Either the government should provide cheaper land for such projects or incentivize developers through tax benefits.

A deterrent for these projects is population density. The building bylaws do not permit the kind of population density in core central areas. And moving the population to suburbs simply because the EWS project is being built there would be unfair. I think there is need for rental housing, which will solve the problem of the population that moves into metros every year for jobs and livelihood.

Despite the land controversy in the Noida Extension area, prices never came down. In fact, many developers have raised their rates by 250 per sq. ft to as high as 500 per sq. ft. Do you think prices have been moved up artificially in the region?

Property prices are a function of demand and supply. When supply is less and demand keeps on rising, prices go up.

But developers, including yourself, with several upcoming projects simultaneously do have a role in generating a price trend.

It is the contrary. Developers are now under pressure to keep the rates constant. Despite inflationary pressures, cost of raw materials going up, they cannot increase the rates. The best they can do is to increase their rates for the remaining inventory of unsold flats. Thus, you will see some rise in the second and third phases of the ongoing projects. Prices are going to remain stable for a couple of quarters.

Investors and buyers play a key role in increasing the rates. In every project, they give advance cheques to book flats.

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Published: 19 Jun 2012, 08:33 PM IST
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