Chief Minister Naveen Patnaik
Bhubaneswar: Real estate developers in the state are pinning hopes on the state’s new housing policy combined with the recent Reserve Bank of India(RBI) decision to increase loan to value(LTV) ratio to revive the sluggish housing market in the festival season.
The ‘Policy for Housing for All in urban Areas 2015’ unveiled by chief minister Naveen Patnaik on October 11, promises a slew of incentives to create housing stock for economically weaker sections(EWS) and lower income groups(LIG). Though market watchers attribute the stagnation to demand exceeding supply in the state capital region, oversupply is a factor mostly in the middle and higher income segments. An estimated around 20,000 housing units, each in the price range of Rs 30 lakh to Rs 60 lakh, remain unsold in and around Bhubaneswar.
However there is almost no housing units in the Rs 10 lakh to Rs 30 lakh segment where demand is maximum. “After the new policy is in place, developers will love to enter the market in the below Rs20 lakh segment, where there is huge scope,’’ said D S Tripathy, joint secretary of Confederation of Real Estate Developers Association of India (Credai).
According to an estimate by the Technical Group on urban Housing shortage (2012-17),the state has a shortfall of about 4,10.000 housing units while Cuttack-Bhubaneswar needs to add 3.60lakh units by 2022. The government policy promises fast track approval, waiver of building sanction fee peripheral development for EWS/LIG units, Of the seven various models offered in the policy to create EWS/LIG houses, the developers are upbeat about Model 2.Under this model, private developers constructing EWS/LIG units beyond the mandatory 10% of their project size will get several incentives.
They will get additional floor space equivalent to 100% of built up area used for EWS and 50% of area used for LIG which they can use for other category of houses. The developer will beat liberty to determine the sale price of such extra EWS/LIG dwelling units subject to an overall upper limit of Rs 15lakh per unit.
“There will be huge scope in the segment for the developers because there will be a large clientele for such houses,” said Umesh Patnaik, president of Association for Odisha Real Estate Developers.
Notably, under the mandatory provision (model I), each developer has to reserve 10% of any residential project of size 2,000 square meter or more for the EWS. Sale price of such units will be decided by the Odisha Urban Housing Mission.
Developers feel the recent RBI decision to increase LTV (ratio of the amount of loan a buyer is eligible to total value of property) to 90% for houses priced up to Rs 30 lakh will also act as a huge push to the market.
Reda president Pradipta Biswasroy said while some recent developments were positive signs, the government should work out a rational value added tax structure for the housing sector.