Scrambling to meet a target of creating 11 lakh affordable homes in the Mumbai Metropolitan Region, the state government’s latest effort at building an affordable housing stock within Mumbai by offering finance to developers in return for low-cost homes has drawn a blank.
While several developers have approached a state government agency for construction finance, all have quoted exorbitant rates, upwards of Rs 18,500 per square feet, for tenements they will have to build for the economically weaker sections and lower-income groups.
The Shivshahi Punarvasan Prakalp Ltd (SPPL), a fully-owned government company, had invited applications from developers implementing slum revamp projects in the city to avail construction finance at an 11.5 per cent interest rate, and build a portion of their sale component as low-cost homes.
Developers implementing slum redevelopment schemes, otherwise, mostly monetise on the sale component by building high end and luxury apartments.
Ten developers evinced interest in the scheme, applying for construction finance made available much below prevailing market interest rate.
Several promised houses in some prime areas of Mumbai such as Bandra, Mahim and Goregaon. The SPPL initially shortlisted six of the ten proposals, weeding out those who didn’t meet the eligibility criteria, but was stumped at the rates at which developers were willing to offer the 30 sqm (323 square feet) tenements, meant for the economically weaker sections and lower-income groups.
An SPPL official who did not wish to be named said, “The lowest price that one of the developers had quoted for the 30-sqm tenements was Rs 60 lakh per tenement. The rest was more expensive than that. The highest a developer quoted is Rs 80 lakh per tenement for houses at a prime location in Bandra.”
The 400-odd tenements that the six schemes together will yield for the state government are spread across suburban areas such as Goregaon, Oshiwara, Bandra, Vakola, Kherwadi and Mankhurd.
As per the ticket prices that the developers have quoted, the per square-foot rates of these houses work out to be Rs 18,576 to Rs 24,768 per square feet.
“We are still negotiating on rates with the shortlisted developers. The problem is that private developers assume a loading of 50 to 60 percent over the carpet area, while we want to allow a loading of maximum 20 percent on the carpet size. We are also scrutinising recent sale agreements registered in these areas to know the exact market rate,” the official said.