New reality projects above 4,000 sq m are almost at a standstill due to the government policy to reserve 20 per cent area of layout area for economically weaker sections (EWS) and lower income group (LIG) persons. The GO is applicable in major municipal corporation areas and urban development authorities. The City reality market which is showing positive signs. For last few years, due to political agitation, unsold stock and the GO 45 for EWS and LIG, the sector was at a low, said R Chalapathi Rao, vice-president, AP Real Estate Developers Association.
During the real estate boom, major national players have constructed multi-storey and multi-block apartments. This had created ample supply in the market. Unfortunately, none of them got fully occupied or fully sold which is being absorbed in recent months. The GO 45 and political agitations in the City has pushed the market growth in other small towns. The market their does not require swathes and realtors can limit the projects to the ones involving less than one acre, he said.
Talking about the viability of the project, he said each project caters to specified economic class. Even the government-developed areas like housing board, with separate blocks each catering to higher income groups (HIG), middle income groups (MIG) and lower income groups (LIG). It is impossible to construct for these sections in the same building because of the size of the units. The weaker sections may require unit areas of average 250 sq ft. However, the normal buyers’ flat sizes may vary from 1,500-2,000 sq ft, he points out.
Each developer has to construct a separate building adjacent to the main building. The smaller the construction size, the higher the costs for the realtors. This also creates disproportion in the number of flats, the flats which are catered to the weaker sections will be more in number than actual flats sold to the general public. This composition is terrifying to the realtors. If the government had asked 20 per cent of the flats in number, this would have created right proportion in creating shelter to the people such as maids and drivers, who are dependent on the residents of the apartment, he said.
Though the government started this initiative keeping inclusive growth in mind, the practicality and viability of scheme was not looked at. Few realtors are going ahead, leaving 20 per cent of the area for these sections. However, they are postponing construction for a later time to get the GO cleared. However, this will take longer construction periods and will cause them to lose opportunities and spike costs, he added.