Haryana Affordable Housing Policy derailed in Gurugram & Faridabad as Cost of Land and Construction skyrocket supper profit margins & viability!
Synopsis
Haryana’s marquee affordable housing policy has all but come to a standstill in Gurugram and Faridabad with developers saying that skyrocketing cost of land and construction has rendered it impossible to do projects under the scheme. Now, officials of the Town and Country Planning Department have acknowledged that there has been no grant of fresh licences for affordable housing projects in Gurugram at least over the last one-and-a- half years to two years, and for two years, there have been no new affordable housing developments in the Gurugram-Manesar Master Plan area either. At present, the selling price of affordable units is restricted to INR 5,000 per sq ft but input costs have soared way beyond this limit and developers are not able to construct houses under the prescribed prices. Homebuyers and industry bodies have also demanded an overhaul of the pricing structure, seeking a continuous policy rather than episodic one to revive momentum in projects.
In Gurugram and Faridabad, Haryana’s affordable housing policy is facing serious challenges on the ground with stakeholders saying there is almost no action as land acquisition and construction costs have spiraled out of control. Drawing a blank Not a single affordable project has been launched in Gurugram-Manesar Master Plan area over the past one-and-a-half to two years as no new licenses for such projects have been approved by Town and Country Planning (TCP) Department officials inform.
And as per the current policy, the government had limited to INR 5,000 psf, the price at which affordable housing can be sold in Gurugram and Faridabad. The average size of units have been kept between 500 sq ft and 800 sq ft, which puts homes in a price bracket of about Rs 26 lakh to Rs 35 lakh. Industry insiders, however, have pointed out that land prices in some of the crucial sectors fall under Gurugram are up by over 100% in last five years, while construction rates are hiked between 25% and 30%, making it difficult for developers to construct flats as per deadline with a price limit (of Rs2,750 per sqft built area) and still make profits.
Developers have said they scaled back or delayed new affordable housing plans because the economics don’t work. Since there are few opportunities for profit in an era of tight pricing, industry participants say, it no longer makes financial sense to build affordable housing project that otherwise would have been able to provide the fresh supply needed by prospective buyers and acting as a drag on market expectations.
Residents have also been fretting over the number of new projects that were slowing down. Middle-class buyers in NCR towns were waiting for new options of affordable housing, but the attempts to buy homes at rates matching to intention of policy remain successful as few months back. Developers and industry bodies have, in turn, been demanding a massive rehaul of the pricing formulae, pushing that prices be hiked by at least 20-25% on prescribed sale rates to be some reflection of market dynamics today. They have additionally called upon the government to make the policy open and dependable, not episodic, in order to support continued involvement and revitalize development of affordable housing.
The policy’s current deadlock underscores the difficulty in matching regulatory pricing thresholds with the significant cost escalations recorded on land and construction inputs – a factor that s stagnated project clearances, and dissuaded developers from investing in new affordable housing projects across primary NCR suburbs.
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