DLF to invest Rs.150 bn on affordable housingDecember 15th, 2008 - 10:14 pm ICT by IANS
New Delhi, Dec 15 (IANS) Even as the country’s realty sector is facing severe fund crunch, realty major DLF Monday announced it will investment Rs.150 billion (Rs.15,000 crore) over the next three years to develop about 40,000 housing units in the mid-income category.”The investment will be solely for the various mid-income residential projects across the country in the range of Rs.15-40 lakh (Rs.1.5-4 million),” DLF Home Developers vice-president A. Harikesh told reporters.
The company will invest Rs.50 billion (Rs.5,000 crore) per annum over the next three years on mid-income housing, realising the huge untapped demand in this category, he said.
Harikesh added that funds would be raised through internal accruals, advances against sales from the customers and private equity.
However, industry insiders say this amount is “too ambitious” in the present economic scenario.
“The realty sector is still under huge pressure and the developers are still borrowing at a rate of 14 percent which is too high. Apart from that the private equities are not very keen on investing in realty projects,” said a senior analyst with global real estate consultant Jones Lang LaSalle Meghraj (JLLM).
“The company has already cut its target for the next year. In this context the announcement is too ambitious,” the analyst, who did not want to be named, said.
The company’s announcement came hours after the state-run commercial banks reduced their interest rates on fresh home loans up to Rs.2 million (Rs.20 lakh) with several other benefits like nil processing fee and free life insurance.
DLF last week denotified its SEZ project.
However, DLS spokesperson Sanjey Roy said it had shelved only those projects which were not granted approvals. “Rest of the projects are on time,” he said.
“Affordable housing is not very profitable venture as the cost of land is still not coming down. The government must provide some subsidy if they want to promote affordable housing,” said Rohtash Goel, chairman and managing director of Omaxe, another leading realty developer.
Omaxe has also announced similar invest plans for on affordable housing. However, the project was postponed for the time being as the developers were facing problems in fund raising.