Mahindra Group To Launch Affordable Housing Projects In Chennai And Mumbai
Economics Times [ 17-06-2014 ]

The Mahindra Group has forayed into affordable housing through its real estate and infrastructure development arm Mahindra Lifespace DevelopersBSE 1.52 %, which is set to launch two projects in Chennai and Mumbai Metropolitan Region in the next two months.

The projects, which will be launched through the developer's new business vertical called Happinest, will target families with total monthly income of up to Rs 40,000. The company is planning to build one-two bedroom houses spread over 350 to 650 sq ft and priced at less than Rs 20 lakh.

"Out of food, clothing and shelter, makaan (home) is the unfinished story in India," said Anand Mahindra, chairman of Mahindra Group in an exclusive interaction with ET.

"We are getting into this because it is such a big need, but we are not doing it as charity . We will try to get it right by making it profitable so that it can be undertaken on sustainable basis."

Mahindra said he hoped that the government would ensure faster approvals, which would reduce cost and gestation period, making these affordable housing projects a sustainable model for all developers.

In the Mumbai Metropolitan Region, the company is planning to develop its project on 15 acres at Boisar while the Chennai project will be spread over 13 acres.

According to the company, it has already received major approvals for the Mumbai project while it is awaiting environmental clearance for the Chennai project.

"India is urbanising fast and more than a third of urban Indians cannot afford to buy their own homes," said Anita Arjundas, managing director and CEO of Mahindra Lifespace Developers.

"Gross margins in our affordable housing projects will be 15-20% against 2530% in conventional realty projects. Going forward, we will look at stabilising the margin at around 20%."

Apart from these projects, the company has two more in the pipeline in Maharashtra, one of them being in the Mumbai Metropolitan Region.

"We have acquired these land parcels through internal accruals and the project construction will be financed through customer advances," Arjundas said.

The company has already tied up with credit rating agencies like Inventur, microfinance companies, including Muthoot and Mahindra Finance, and some micro-housing finance companies to ensure that end users, not investors, buy these houses.

About 19 million families in India live either in slums or in low-income neighbourhoods on rent in urban areas and this housing deficit is expected to rise to 38 million by 2030, the company said.

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