India Real Estate Monitor

The government’s thrust on affordable housing has created opportunities for developers across the country. Rolling back its earlier plans to halt new launches, south-based builder Puravankara Projects has decided to invest Rs 1,900 crore by 2010 for three affordable housing projects in Bangalore and Chennai.
Ravi Ramu, director, said the company would launch two of the projects in six months and the third in 2009.
The recent stimulus package announced by the government has given a great boost to the sector, he said. “The package seems heaven-sent for our affordable housing project,” Ramu added.
The government has said that public sector banks would shortly announce a package for home loans borrowers in two slabs – up to Rs 5 lakh and Rs 5 lakh-Rs 20 lakh. This is meant to stimulate demand for homes, which has dropped by 45-50% across India.
Puravankara, which has a land bank of 125 million square feet, said its fully-owned subsidiary Provident Housing and Infrastructure would launch the affordable housing projects. The firm is currently waiting for an approval from the government. The three projects will have a total of 15,000 units and are expected to be ready by 2010-11.
Despite tight liquidity conditions in the market, Puravankara is optimistic it would get funding for these projects. Ramu said the funding for the first phase of the projects will be through debt and customer advances. The real estate firm has book net worth of Rs 1,300 crore and plans to leverage on it to raise funds. Its debt-equity ratio is 0.58.
“Depending on the amount raised through customer advances, we will go for loan. We have land and we don’t need immediate cash flow at the moment,” said Ramu.
Puravankara already has 105 acres in Bangalore which it would use for the project. Ramu also expects construction charges to fall by 10% due to steel and cement price cuts.
In these projects, the price points will be Rs 10 lakh, Rs 15 lakh and Rs 20 lakh, respectively, for one-, two- and three-bedroom houses. The two- and three-bedroom houses will span 750 square feet to 1,100 square feet, with one-bedroom homes being smaller.
Under phase I, Puravankara will cover Bangalore, Chennai, Hyderabad, Coimbatore and Mysore, while in phase II, it will go to cities such as Delhi, Kolkata, Kochi, Jaipur, Pune and Nagpur.