Government a perpetuator of real estate price escalation

Track2Realty Roundtable-V

Venue—India Habitat Centre

Moderator—Ravi Sinha, CEO & Managing Editor, Track2Realty

Panelists—Sachin Sandhir, MD, South Asia, RICS

                        Achal Agarwal, ED, Investments, Fire Capital

                        Sunil Dahiya, MD, Vigneshwara Developers

                        J C Khera, GM, Finance, Supertech

Sachin Sandhir: When the Government talks about affordable housing and expects the developers to do affordable housing, it is a misnomer because the Government is the first perpetuator of price escalation by auctioning the land to the highest bidder. Then to expect the developer to not make a profit of 50-60 per cent or whatever his expectation, is unrealistic.

Achal Agarwal: Another thing I would like to say is that the policy is setting benchmarks with which the developers will be facing resistance in any case.

Ravi Sinha: I think it is easier said than done. Within the farmer community there will be pressure groups as well. You can not expect all of them to fall in line.

Achal Agarwal: I see a disconnect in the policy that if you have defined a price point then the developer will have to go close to that price point.

Sunil Dahiya: No, it is not like that. You go 50 kms ahead of Delhi, what is the price of land there? Not more than 20 lakh per acre. You talk to 100 farmers in that area that I want to purchase your land at Rs. 1 crore an acre. Every farmer will sell. You buy 100 acres; you go to the Government and tell them to let you bring in your own FAR.

Achal Agarwal: As Ravi pointed out, it is easier said than done. The way I look at it, with Government intervention if you get the land that can be the last resort if you are stuck somewhere. I am saying this from your point only.  Gurgaon has not been able to provide affordable housing. The challenge today is that you don’t get anything for less than Rs. 1 crore. It is definitely not a holistic development.

JC Khera: If we go in for land acquisition from the farmers, the land hoarding act comes into force at the time of buying more than 20 acres of land. So we have to go for small acquisitions especially in states where you have a ceiling on land acquisitions. So the only route left would be to go through the Government.

…..to be continued