“There is more to life than increasing its speed.” ~ Mohandas K. Gandhi Integrated townships are the next big thing in the Indian real estate sector since land prices have peaked in major metro cities and with basic infrastructure struggling to cope up with rising populations, developers are building cities away from the metros to provide contemporary lifestyles in Tier II and III cities and towns. Integrated townships are coming up in all segments, ranging from low-cost to high-end formats and in times to come, integrated townships could well be the answer to India’s urban habitat problems.

To counter the growing congestion in metros, the government is promoting many cities and towns that are close to the major metros. Towns in Haryana are foremost amongst them and are fast emerging as future satellite townships with most of the new developments taking place at strategic locations with easier access and proximity to New Delhi. Karnal, for example being located midway between New Delhi and Chandigarh on the Grand Trunk Road, enjoys the status of a Tier II city with the potential to also emerge as the State capital of Haryana.

Another big draw for our 3 townships in Haryana are the eco-friendly practices adopted by us in these townships namely, Alpha International City in Karnal, Fatehabad and Kurukshetra. These practices would optimise the performance of each township, while preserving and protecting important resources like water, land and energy. This is accomplished through an integrated approach to architecture, blending design issues, energy-efficient materials, construction techniques, effective building systems and taking advantage of renewable energy supplies. Eco-friendly practices are a must for every phase of the construction project, from the planning stages to completion.

The concept of living in integrated township seems to have caught on in a big way. The people in Tier II and III cities and towns aspire to have a world-class lifestyle with accompanying comforts. Our 3 integrated townships, Alpha International City (AIC), in Karnal, Fatehabad and Kurukshetra are world-class development projects, and among the first such developments by any real estate developer in the country in a Tier-II or III city or town. These 3 integrated townships are planned towards providing a metropolitan environment to buyers and are backed by infrastructure that goes well beyond the minimum requirements prescribed by local bylaws.  We have laid down infrastructure aimed at ensuring that the facilities are fully compliant with plans at the time of possession. Designed to integrate all the comforts, amenities and infrastructure prerequisites of an international urban lifestyle, these townships offer the ideal environment for modern homes with all the joys of living. Everything that the residents may require will be close at hand, sometimes within walking distance.

 The outstanding feature of each of the 3 Alpha International Cities is their respective locations. Each township is located amidst verdant surroundings with abundant tree cover and ground water, thereby providing the ideal environment for healthy and pollution-free living. Safety and security to the inhabitants along with provision of high quality, world-class education and healthcare facilities are top priorities in each Alpha International City, besides designated police and fire stations.
 
 The healthy and secure social infrastructure will provide a unique way of life to the inhabitants, including facilities that encourage sports, besides safe play areas for children. To top it, the ‘Alpha Life Club’ will be the hub of activity in each township besides facilitating and sustaining the spirit of bonhomie and mutual cooperation among residents.

 

AlphaG:Corp's GurgaonOne

According to estimates of the Central Ground Water Authority (CGWA), Gurgaon's water table has been declining at a rate of about two metres every year since 2006! At this rate, the city may dry up its water sources by 2017 if urgent remedial steps are not undertaken by the authorities and all stakeholders alike. According to Surge, a non-profit organization, the water table in Gurgaon is already 40 metres below ground level. In a different part of Gurgaon, GurgaonOne our 10-acre eco-friendly habitat consisting of 240 apartments, penthouses and villas and spread over mandatory green land on the old Delhi-Jaipur highway ranks at the top among large residential complexes conforming to the National Environment Policy, 2006.

This project meets the nascent but growing need in India of premium living in eco-balanced habitats. The outstanding feature of GurgaonOne is its location on the biggest green patch of Gurgaon off the national highway and on the periphery of the mandatory 1000 acre green area there. Due to the green area adjoining it and its location in the municipal area, the greenery and water table level of GurgaonOne is considerably higher (less than 30 metres).

Even so, our commitment to environmentally proficient projects led among other steps to the incorporation of extensive and sustainable water harvesting systems in the complex with a 300 KLD sewage treatment plant -- the first treatment plant of this size in Delhi NCR. The water treated in this plant is used for irrigation of the 2.03 acre open green area in the complex, as also for storage and recharging of groundwater after rain harvesting. The six wells function in reverse mode of bore-wells, allowing rainwater to seep back into the ground, thereby constantly bringing the water table up. The complex has 100% water backup, along with purification from the 1,80,000 litres water softening plant. Besides, the underground tank capacity is of 6,00,000 litres, within which 2,00,000 litres is treated water in sub-tanks; 2,00,000 litres of raw water and 2,00,000 litres for the fire fighting system alone.

The eco-systems at GurgaonOne were incorporated in the initial design specs of the complex by the architects, Arcop (Associate of Le Arcop) and due evaluations were made by them at every stage of construction to ensure 100% sustainability and efficiency of all systems. Pre-planning and implementation of extensive development of Green Belt, Rainwater Harvesting, Energy Conservation Systems, Segregation & Management of Waste -- Solid and Liquid, Vermiculture and Advanced Sewage Treatment Plant make GurgaonOne a well-defined and path-breaking benchmark among eco-friendly habitats for sustainable environmental practices.

Our endeavor is to involve the whole community to foster the feeling of living in a natural and eco-friendly habitat. To facilitate that, I volunteered to head the RWA of GurgaonOne and am really pleased that our team effort has helped us to achieve our objective in less than 2 years. The results are evident on the ground as well as in the community spirit among the residents of this habitat. All this, combined with the high water table at the location and our sustainable systems at GurgaonOne, make this complex one of the most coveted addresses for buyers in Gurgaon.

 

Given the industry scenario, there were naturally several expectations from the Budget. The provisions expected for the real estate and infrastructure sectors have remained on the wish-list rather than becoming reality in a diminishing market.

The Budget is not the only avenue for the FM to introduce the measures required to prop up demand in the housing sector. In that sense, we remain optimistic. But the expected measures came short even in the large and crucial affordable housing segment.

Key measures announced in the Budget:

• Focus on rural housing and housing for urban poor – measures include increased allocation for Jawaharlal Nehru National Urban Renewal Mission to Rs. 128.9   billion, enhanced allocation for housing and provision for basic amenities to the urban poor to Rs. 39.7 billion (includes Rajiv Awaas Yojana, a new scheme aimed to make the country slum-free in the five year period), allocation under Indira Awaas Yojana increased by 63% to Rs. 88 billion and further allocation of Rs. 20 billion for rural housing fund. If these are not merely populist announcements but a sustained and synchronized effort is made towards this urgent end, this government will establish itself as one that believes in and practices inclusive growth. Meanwhile, they should be more realistic in the definition of affordable housing and housing for poor where parameters of plot size, floor area and cost of construction are concerned. Tax savings and incentives for developers that are equipped to service this enormous segment should also be taken seriously as only collaborative effort will see this ambitious plan bear fruit.
• A key negative for developers is the increase in minimum alternate tax (MAT) to 15% from 10%. The increase in MAT affects developers with low taxes because of tax breaks for executing government projects.
• Tax exemptions for STPIs extended by a year, which can maintain occupancy levels for IT parks. But this could potentially also cannibalize demand for new SEZ developments in the near term.

On Thursday, the Centre asked States to come on board to formulate new schemes for housing the urban poor on an urgent basis. We hope this is done in a feasible manner. All in all, we will continue to keep our faith and hope that the urgent measures required will be recognized and addressed promptly by this government following the Budget announcements.

 

There are naturally several expectations from the forthcoming budget as well as speculations about the provisions that will be made available to the real estate and infrastructure sectors this time. Given the year gone by and the newly elected government’s stated sensitivity and urgency towards housing and infrastructure, the expectations from the budget include tax exemptions, easing of fund raising through FDI sources, interest quotient in the case of home loans among others. In the past year, the real estate sector experienced a real slowdown in demand because of the culmination of extraneous factors like rise in interest rates in January-March 2008 by almost 2 percentage points to 12%. At the same time, the prevailing prices of residential apartments in most cities made them unaffordable.

The situation further worsened after global financial markets got affected due to the failure of banks and brokering houses in the US and Europe. This adversely affected the Indian real estate market and demand plummeted.

However, according to World Bank projection, India will grow at 8% in 2010, making it the fastest growing economy for the first time, overtaking China’s growth of 7.7%.In a country of over a billion people, mass scale housing for the general population is the need of the hour for encouraging and sustaining inclusive growth. In the 2001 census, India had a homeless population of 78 million. Delhi had 3.1% of the national level, while Bihar and Tamil Nadu had 1.6% and 7.3% respectively. By all accounts, that figure would have increased substantially in the past 8-9 years. Real estate developers must be encouraged through fiscal incentives to construct small dwelling units at affordable prices and should also be encouraged through Private Public Partnership (PPP). The increase in the construction activity would simultaneously generate millions of job opportunities besides giving a boost to other industries such as cement, iron and steel.

Industry sentiment at present is that the new UPA government will take special measures to bring down the interest rates further to enable the public at large to buy houses. The mantra for developers like us in the present times is to be aware of the changing demand and supply dynamics in the markets. For those who believe that real estate will again become a sellers’ market, it is time for a reality check. The need of the hour is a fresh and honest outlook on deliverables and accountability by developers. Developers should on their part give impetus to the outlook of increasing mutual trust between companies and customers by fostering transparency, be it through their websites, CRM, media communication or corporate blog. This outlook would make the engagement process with the public at large much more interactive, dynamic and mutually rewarding, thereby also allowing the government to look at this sector as an integral partner in the planned growth of the nation.
 
Construction is an integral part of the infrastructure sector and comprises commercial, residential, roadways, waterworks, ports, airports and SEZs. In 2005, the sector generated around 31 million jobs, out of which, the organised sector generated 1.2 million jobs and the unorganized sector generated the rest. Going forward and taking a cue from the government’s ambitious projects lined up for the Eleventh Plan period, the demand for construction is expected to grow by at least 8-9%, and 2.5 million new employment opportunities per annum are expected to be generated.
 
The real estate sector has been asking for extension of tax holiday for five years under section 80-IB (10) for housing projects approved after March 31, 2007. A renewal of section 80-IB, which gives tax waivers to a housing unit built in less than 1,000 sq. ft., should definitely be re-introduced so as to provide a fillip to the construction of much-needed small and affordable homes. This concession was available before 2007! Re-implementation of section 80-IB (10) will greatly help in developing affordable housing in the country. Logically and in keeping with the times, the limit for deduction of interest paid on loans for purchase or construction of houses should also be raised from Rs. 1.5 lakhs to Rs. 3 lakhs.
 
At the same time, we would also like optimum clarity on foreign direct investment (FDI) in retail. The real estate industry requires liberalization in the retail sector for the much needed fillip, especially now when the sector is reeling and feeling the worst effect of the slowdown.  With opponents of FDI in organised retail biting the political dust in 2009, retail players are hoping to expand, especially by way of foreign investments. In 2006, the UPA had encouraged organised retail by opening up FDI in single brand outlets by up to 51%. Unfortunately, the same was not permitted for multi-brand outlets because of the constraints of differing coalition partners at the time. Given that there are many big brands looking at India, government policies will hopefully begin to reflect the greater value, convenience and employment opportunities that retail growth represents for Indian consumers, the industry and India’s overall image as a forward looking nation with a global view.
 
Developers have also been asking for industry status for the housing sector and for extending the definition of infrastructure to include group housing and integrated townships under its fold. With the present government’s stated intent, this should soon become reality.

 

Alpha International City Kurukshetra

Is Affordable housing still a dream or a reality? Affordable housing can be a reality if the government and developers are sincere in their intent to meet the huge unmet demand for affordable housing. The margins in this category are not as lucrative as the premium segment, which in any case has witnessed an oversupply. With the slow down and recession, the prices in the premium segment fell to almost 50% in one year. This resulted in a vacuum and informed investors acknowledge that the buzzword today is ‘Affordable Housing’ -- a vision of housing every family in the country.

Added to this most sustainable trend, the resurrection of investors seems imminent which we as developers will precipitate along with financial institutions and banks that are now actively encouraging low interest rates on affordable housing.

The question is how to best realize the potential?
Part of the infrastructure in the NCR is being built to decongest the city road network by way of expressways, which should be further encouraged by enabling and facilitating large and mass habitats along these expressways where cheap land could be made available by the Public Enterprise. Within that initiative, Private Developers could be encouraged through Private Public Partnership (PPT) to build affordable housing where the general populace could live and use rapid transport systems to travel to work.Mass scale housing for the general population is the need of the hour for initiating and sustaining inclusive growth. This will also help clean the environment of cities that are bursting at their seams. As a consequence of such increased infrastructure and development there will be an automatic expansion of Megapolises that will envelop several tier 2 and 3 towns in their growth. Further, the cost effectiveness or affordability factor will contribute to the increased attraction of these suburban areas.

The thrust to build such mass habitats will also call for innovative methods of construction by using newer energy efficient environment friendly material with technologies that are not only affordable but also qualitatively durable. Besides, these modern innovations are efficient in terms of deliveries and simple to complete through the use of pre-fabricated ready-to-use material.

Many of the developers in the surrounding outskirts of metros have announced affordable housing in the range of Rs.5 Lacs to about Rs.15 Lacs for 1 to 2 BHK units. Some even have provided 3 BHK units at prices of Rs.18 to 20 Lacs. In addition to the initiatives by the developers, the government should also consider tax sops including cuts in duties and levies on every completed affordable housing project that meets with the requirement in terms of accountable deliverables.

Of course the slowdown will probably continue for some time to come but with the second successive fiscal stimulus by the government coupled with the buoyancy to build affordable housing, will help to realise the dreams of many a common man of finally owning a house.