The Mahindra Group’s real estate arm, which operates its low-cost housing business under the Happinest brand, is currently building three affordable housing projects costing ₹8-25 lakh in Mumbai and Chennai.
The strategy to build homes under the PPP model is in line with the company’s “ambitious" target to sell around 10,000 affordable homes every year in the next three to four years, Arvind Subramanian, chief executive, Mahindra Happinest Developers Ltd said in an interview. The company has delivered over 1,600 homes so far and is currently developing about 3,500 units.
“We see an opportunity in participating in the absolute lower end of the market through the PPP model. This makes sense to us because it takes away sales and collection risk. At this stage, we are studying various state government tenders," he said.
Under the government’s affordable housing scheme Pradhan Mantri Awas Yojana (PMAY), state governments invite tenders to build affordable homes especially for the EWS categories. “Traditionally EPC (engineering, procurement and construction) players are more suited to participate in such tenders rather than developers. But we are seeing some variations in how some states are taking it forward. So, there is potentially a role where a developer can participate as well," he said.
The firm is currently studying various state tenders in Maharashtra, Gujarat, Jharkhand, Odisha and Bihar, among others. “What this would give us is the required scale and innovation needed in our self development business as well," he added.
Mahindra Lifespace is meanwhile planning its fourth affordable housing project, at Kalyan near Mumbai, by September this year, with around 1,200 units. It is also looking to enter Pune in the near future.
“We have set our sights very high. We want to sell and deliver 10,000 homes a year in about 4-5 years. That’s the journey we are on. By the end of this year, we should be doing about 5,000 units under-development. There is a strong pipeline of projects getting into next year," Subramanian said.
In 2017, Mahindra Lifespace partnered HDFC Capital Advisors Ltd to jointly invest ₹500 crore over the next three years to develop affordable housing projects. In March this year, the joint platform launched its first affordable project at Palghar in Mumbai’s outskirts. So far, it has invested over ₹100 crore of the total funds, he added.