Oberoi Realty Ltd, which had so far been into luxury homes, is gearing up to enter the affordable housing segment with new project launches during Diwali.
In an interview, Vikas Oberoi, chairman and managing director of the company, said the new project comprising 2,000-3,000 apartments will be built on a 60-acre plot in Thane. Oberoi had bought the plot from GlaxoSmithKline Pharmaceuticals for ₹555 crore two years ago.
In the recent past, many large developers have entered the mid-income and affordable segment to tide over the slowdown in the luxury housing market, particularly those costing above ₹2 crore. “The government’s definition of affordable housing prior to the budget was based on area, which is up to 600 square feet (sq. ft). We had received certain approvals as per the previous definition in the previous regime and they are still valid. So, we will be finishing it," Oberoi said.
The housing units will be up to 600 sq. ft in carpet area, and are likely to be priced at ₹12,000 per sq. ft, he added. So, each unit will cost around ₹70 lakh.
While the price range will be well above the affordable housing category under the goods and services tax (GST), Oberoi said the company will be eligible for tax benefits under the affordable housing scheme as per Section 80-IAB of the Income Tax Act.
In February, the GST Council had announced that under-construction properties priced up to ₹45 lakh will be categorised under affordable housing. However, in the Union budget of 2017, the Prime Minister Narendra Modi-led National Democratic Alliance government had proposed 100% tax deduction on profits for homes of up to 30 square metre (323 sq. ft) and 60 sq. m (646 sq. ft).
“We are looking at affordability. But we will always be the luxury option for affordable housing. Right now my cheapest apartment is around ₹3 crore," Oberoi said.
At present, the company is building around 27.43 million sq. ft of both commercial and residential space. So far, it has developed 42 projects in Mumbai, aggregating about 11.89 million sq. ft.
Oberoi said the ongoing consolidation in the real estate sector, following the implementation of the Real Estate (Regulation and Development) Act, 2016, and demonetization, branded companies have had the opportunity to expand.
“There is going to be huge consolidation. We are accelerating our construction and expansion plans. Despite the election and liquidity crisis, we have achieved strong sales in the first quarter. All our projects are cash-positive and, since ready apartments are in demand, we are accelerating construction much more," he said.
“Luxury home sales beyond ₹2 crore price bracket are suffering. And the ultra luxury projects are in extremely slow pace. This has prompted many developers to get into a segment which is getting traction. Besides, the government has provided various incentives for developers to build affordable housing," said Pankaj Kapoor, managing director, Liases Foras, a property advisory firm.
According to the Liases Foras report released on Monday, maximum number of new launches were in the ₹50 lakh bracket, accounting for more than one-third (38%) of total units launched during the first quarter ended 30 June. Around 65,111 units were launched in the top eight cities, which included Mumbai and Delhi NCR.