Difficult To Meet Twin Parameters Of Price And Size In Affordable Housing: Niranjan Hiranandani

As the government chases its ambition to provide homes to all by 2020, affordable housing has become centrestage of India’s real estate issue. While the motive is nothing less than commendable, there are several pain points that might act as roadblocks in achieving the target, though. In a conversation with Sneha Sharon Mammen, Niranjan Hiranandani, Co-Founder and Managing Director, Hiranandani Group, talks about the challenges in the way of the centre-sponsored Pradhan Mantri Awas Yojana.

Here are the edited excerpts of the interview.

Q: Do you plan to enter the affordable housing segment? Any plans to launch projects under the PMAY scheme?

Ans: We are positive about affordable housing but if one looks at the twin parameters of price point and size, the definition does not fit our ongoing projects in Mumbai and prominent locations of the MMR. At Hiranandani Group, while we meet the ‘size’ definition of our affordable housing, our offerings do not meet the recent guidelines as regards to the price point. Therefore, the homebuyer will not be able to avail of government benefits and incentives of affordable housing under the PMAY scheme as of now.

We do plan to launch projects under the affordable housing segment, in locations where both parameters of the definition of affordable housing under PMAY can be met.

Q: Where will these projects be located? Are these locations well-connected?

Ans: As of now, plans include locations within our existing township such as Hiranandani Estate Thane, Hiranandani Fortune City Panvel, etc. All these locations are well-connected by road and rail.

Q:  Why do you plan to develop PMAY projects? What are the main benefits and challenges?

Ans: The main benefit is that a homebuyer can make use of the government subsidy in his purchase. However, creating a project which fits into both parameters, size and price-point, is a challenge. In Mumbai and Delhi, the price point prescribed under the scheme is difficult to meet – prevailing price-points are higher and just trimming down the size of a flat is not a practical answer. Extremely small apartment do not meet with home seekers’ demand requirements.

Q: What factors can help increase private developer interest in PMAY? How can the government help?

Ans: The various announcements under the PMAY scheme including the increase in carpet area of houses eligible for interest subsidy under the credit-linked subvention scheme for the medium-income group beneficiaries, effectively created a 33 per cent increase in carpet area eligible for subsidy in the MIG segment. Like the other announcements by the government, this will definitely create positive sentiments among all the stakeholders. It will also give a thrust and motivate the private developer to enter into this segment all this initiatives will lead to robust growth of housing sector.

Q:  What are some of the trends that would affect the residential sector going forward?

Ans: The set of regulatory changes that were implemented from 2016-end to mid-2017 have proved the maxim right – short-term pain for long- term gain. So, the RERA is the big transformer, changing the paradigm and bringing in transparency in the way transactions are done along with bringing accountability on part of developers. Obviously, the home seeker is realising the positives and from a fence sitter, is gradually turning into an actual buyer.

Q:  How has technology changed the way you develop housing? Are you using different construction method/technology to make projects more profitable?

 Ans: The construction industry is also adapting with ever-evolving technology trends and innovation. Current trends expect volume production and short delivery time. This has to be achieved via cost effective methodologies introduced like tower cranes, aluminium shuttering, precast and prefab material, using of fly ash and reusable materials. These newer technologies are driven by mechanisation, automation, artificial intelligence which plays a major role. The group has also adopted global best practices that have been assimilated across all our newer projects.

Q: What are some of the challenges the sector is facing?

Ans: Liquidity is one of the biggest challenges that the sector is facing, along with stressed, stalled and delayed projects. The tsunami of regulatory changes which have resulted in a slowdown of construction along with project finance are some more major challenges.

Owing to these, developers are unable to raise funds and projects are delayed. Such companies end up facing insolvency. Further, the NBFC crisis has created a fiscal challenge which is impacting financial viability across such delayed and stalled projects. The industry needs urgent and strong steps to solve this challenge.

Q: Please provide us with a brief snapshot of your residential projects. Which segments are you targeting?

Ans: Hiranandani Group is actively catering to the luxury as well as mid-segment. We are pioneers of the mixed-used integrated township model of the real estate development, which promotes the walk-to-work–walk-back home concept. Our ongoing developments are across many multiple projects such as Hiranandani Gardens Powai, Hiranandani Estate Thane, Hiranandani Fortune City Panvel, Hiranandani Parks– Oragadam, Chennai, Mt Alterra, Khandala, Hiranandani Sands-Nagaon, Alibaug, to name a few.