Property developer Sunteck Realty is planning to invest around Rs 6,000 crore to develop three large affordable housing projects spread over 250 acres in Mumbai Metropolitan Region over the next five-six years, the company chairman said.
Two out of these three projects, spread over 100-acre land parcels in Vasai and Vasind near Mumbai, were acquired during the pandemic, while 150 acres is part of its Naigaon project.
The listed company has already started construction in Naigaon on around 18 acres for the first two phases of the project.
“We expect affordable housing to be the long-term growth engine for the company,” Kamal Khetan, chairman and managing director of Sunteck Realty, told ET. “Currently, the segment contributes one-third of our revenues. We foresee this share to increase towards 50% on a sustainable basis, creating a diversified and balanced portfolio with our recent acquisitions of Vasai and Vasind. Moreover, various initiatives under the government’s ‘Housing for All’ scheme is further encouraging our active participation in this segment.”
Sunteck has ventured into affordable housing through its aspirational luxury brand Sunteck World.
Both the new projects in Vasai and Vasind apart from new phases in Naigaon will be financed through customer advances from pre-sales and construction finance in line with the funding strategy deployed for the first two phases in Naigaon, Khetan said.
In July, in one of the largest land transactions since lockdown, the company had acquired a 50-acre project in Vasai with a development potential of around 4.5 million square feet.
The project is expected to commence this year and will be developed over the next 5-7 years. Sunteck’s share of revenue in this project, which has a total potential of up to Rs 5,000 crore, is 74%.
In October, the developer entered into an agreement to acquire additional 50 acres in Thane’s Vasind locality to develop a 2.6 million sq ft integrated township. The project to be developed under brand Sunteck World is estimated to generate revenue worth Rs 1,250 crore over the next 4-5 years.
Sunteck’s revenue share in this project, which will start construction this year, is around 80%.
Supply of affordable housing is likely to increase with the government’s proposed extension of the tax holiday for such projects and additional deduction of Rs 1.5 lakh for loans taken for buying these homes by one more year until March 31, 2022.
The tax holiday for developers and additional deduction on home loans are expected to support both the demand and supply side of the affordable housing segment, which is playing a crucial role in achieving the government’s stated objective of ‘Housing for All by 2022’.
Property developers are expected to launch more affordable housing projects–the segment that has one of the leading demand patterns since the last three years–to claim 100% tax deduction on profits from such projects.
In 2019 too, the government had extended the timeline for approval of such projects on or before 31 March 2020 and this was extended by another year in the last budget. In 2019, the government had also reduced the Goods & Services Tax (GST) for affordable housing projects to 1%. Ends