Delhi builders may have to reserve area for middle-income homes
Mint, 25-08-07

The middle-income houses would be mostly two-bedroom units that would cost anywhere between Rs30 lakh and Rs40 lakh

The urban development ministry plans to make it compulsory for private developers who acquire land from the Delhi Development Authority (DDA), or an owner of government land in the National Capital, to reserve a portion of the floor area ratio for building houses for middle-income families.

“There is nothing affordable for the middle class right now,” said a ministry
Reserved accommodation: Large companies such as DLF Ltd, Parsvnath Developers Ltd and Unitech Ltd have lined up plans to build two- or three-bedroom apartments that will cost around Rs30-40 lakh each.

official, who did not wish to be named. “We are thinking on these lines to provide affordable houses for the middle class.”
The middle-income houses would be mostly two-bedroom units that would cost anywhere between Rs30 lakh and Rs40 lakh. The floor area ratio that would be reserved has not been decided as yet. “It is still at a proposal stage,” the official said.

The ministry has already made it mandatory for private developers who acquire land from any government agency to reserve 15% of the floor area ratio or 35% of the houses or apartments built for the low-income category, as a rapid explosion in land prices has left it completely out of the market. If they do not do so, developers have to return 35% of the apartments built, or those that occupy 15% of the floor area ratio, to the government agency.

The ministry is also looking at augmenting the supply of middle-income houses by asking DDA to build houses or apartments on land meant for residential use, rather than auctioning all of the land to private developers.
“When land is auctioned by DDA, the reserve price of land is usually high, which pushes up the property prices,” the official said. “Instead, we want DDA to build apartments on the land and offer it to the public through open schemes or on an allotment basis.”
Middle-income houses that are affordable are much in demand now as property prices have spiralled in the last three years, increasing by 30-100% in the metros and in the National Capital Region.

Cashing in on this demand are some private developers who have announced plans to make affordable houses for the middle class.
Even large players such as DLF Ltd, Parsvnath Developers Ltd and Unitech Ltd have lined up plans to build houses that will cost around Rs30-40 lakh. These would typically be two- or three-bedroom apartments, either in the metros or in smaller tier-II or III cities.

Developers have mixed reactions to this proposal. The government move will help fulfil the huge demand for affordable houses, Arvind Parekh, chief financial officer, Omaxe Ltd, said. “There is a shortage of 20 million houses, and unless the government makes it mandatory, it is difficult to meet the demand for affordable houses.”

“I don’t think this is relevant as most of the houses being built are for the middle class,” said B.P. Dhaka, spokesperson for Parsvnath Developers. “The economics of business should be kept in mind before framing any rules.”