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Affordable housing emerging as new focus of housing finance firms: Industry



New Delhi, May 29:  With a slew of reforms and push from the government, affordable housing — so far the poor second-cousin of real estate — is emerging as the preferred segment for housing finance institutions and developers alike, say industry stakeholders and experts.

“Affordable housing is now attracting the interest of more developers who had previously shunned it because of its down-market image. Today, it has become a respectable segment and with the government’s determined push… it now plays a very important role in the housing finance sector,” Anuj Puri, Residential Chairman of property consulting firm Jones Lang LaSalle, told IANS.

LIC Housing Finance said it has identified affordable housing as the focus area for the current year and has devised strategies and action plans for greater emphasis on the sector.

Shankara Vaddadi, CEO and Founder of online peer-to-peer lending platform I-lend, told IANS, “With quick turnaround times, this sector is ripe for a new breed of housing finance companies to enter with much lower thresholds and quicker movement on disbursal. This will lead to competition.. we can see a new breed of non-banking financial companies (NBFCs) getting into the sector and making quick inroads.”

According to a report by domestic ratings agency Crisil, affordable homes are altering mortgage market dynamics. It estimates that the segment was worth around Rs 1.6 lakh crore as on March 31, 2017 — accounting for over 25 per cent of all housing loans.

Affordable housing has the potential to be clean and quick, leading to lower operational and marketing costs and helping in creating a new category within the realty space.

Amol Shimpi, Associate Dean and Director, School of Real Estate, RICS School of Built Environment, Amity University, told IANS, “However, it must be noted that the business of affordable housing can prove tricky for the players if enough caution is not exercised. For example, bringing down the construction cost without compromising on quality may be easier said than done.”

While the segment is on a growth curve, the goal of providing affordable housing to all will be achieved by bridging the gap that currently exists between access to capital and execution capability.

The other aspect of affordable housing will be the increasing use of newer material for building houses and construction techniques which might revolutionise the sector.

Brotin Banerjee, MD and CEO, Tata Housing Development Company, said, “The growth and sustenance of this segment is as dependent on a dedicated public-private partnership (PPP) model as it is on the successful creation of infrastructure in the earmarked regions.

“The government’s focus on affordable housing is likely to spur private participation further. The segment can serve as a revenue stream in the wake of slower sales in other categories,” Banerjee told IANS.

Traditionally, the onus of supplying affordable housing has been with public sector entities. However, the entire ecosystem of regulators, developers or banks are coming together to push the government’s objective of “Housing for All”.

Not only the public sector but also private sector banks have reduced the home loan rates to boost the sector. State Bank of India, LIC Housing Finance and Housing Development Finance Corporation, among others, recently reduced home loan interest rates by up to 30 basis points.

Sudhir Pai, CEO, Magicbricks said that the company was already witnessing a spike of 40 per cent in searches and 30 per cent in owner listings since February.

“In addition to the lower rates for home loans, the Credit Linked Subsidy Scheme (CLSS) released by the National Housing Bank (NHB) has also helped. This reduces the effective home loan rate for the borrower,” Pai said.

Under the CLSS, those in a salary bracket of up to Rs 6 lakh a year can avail a credit subsidy of 6.5 per cent on housing loans. In the Union Budget, a 4 per cent and 3 per cent interest subsidy was announced for those annually earning up to Rs 12 lakh and Rs 18 lakh, respectively, on home loans of up to Rs 12 lakh.

Additionally, the rollout of the Goods and Services Tax (GST) is not expected to lead to an increase in the cost to the buyers.

Many construction materials are in the 18 and 28 per cent GST slabs. For example, steel and steel products are at 18 per cent and cement is at 28 per cent. Currently, the total tax burden is calculated at 30 to 31 per cent, which is 2-3 percent more than the proposed GST rate for cement. Also, as an input tax credit is available, the overall tax incidence should be neutralised.

“Thus, the basic construction cost may come down a little, but as the input tax credit is limited to 12 per cent, there may not be much saving in the high-end specification construction,” Surabhi Arora, Senior Associate Director, Research, Colliers International India, said.

“The question for the buyer will remain whether the developer will pass the saving in the form of price correction or not, despite the anti-profiteering clause because it may be difficult to monitor in real time,” Arora said.

Moreover, infrastructure status to the affordable housing segment and Real Estate Regulation and Development Act, 2016 (RERA) are considered crucial moves for its growth.


By Meghna Mittal

(Meghna Mittal can be reached at [email protected])


Hyundai Motor India launches all new Santro

“Our R&D centre in Namyang (S. Korea), Chennai and Hyderabad have put strong efforts for product supremacy and utmost customer delight.”



2018 Hyundai Santro launch
New Delhi: Hyundai Motor India Ltd MD and CEO Y K Koo and actor Shah Rukh Khan pose with the newly launched 2018 Hyundai Santro in New Delhi, on Oct 23, 2018. (Photo: Amlan Paliwal/IANS)

New Delhi, Oct 23 : Automobile major Hyundai Motor India (HMIL) on Tuesday launched ‘the all new Santro’ with an introductory price starting at Rs 3.89 lakh.

“The all new Santro is a true example of Hyundai’s Made-in-India philosophy and a shining result of our numerous product clinics and rigorous durability test on various terrains in India,” Y.K. Koo, MD and CEO, HMIL said in a statement.

“Our R&D centre in Namyang (S. Korea), Chennai and Hyderabad have put strong efforts for product supremacy and utmost customer delight.”

According to the company, the new passenger car is equipped with a 4-cylinder 1.1 litre petrol engine which offers 69 ps of power. It is mated with option of MT (manual transmission) and in-house developed ‘Smart Auto’ AMT (automatic manual transmission).

The petrol powered vehicle comes with a fuel mileage of 20.3 km per litre. It also has the option for a factory fitted CNG (60 L water equivalent).

Currently, the company has ten car models across segments – Eon, All New Santro, Grand i10, Elite i20, Active i20, Xcent, Verna, Elantra, Creta and Tucson.

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Xiaomi leads India smartphone shipments in Q3 2018: Counterpoint



New Delhi, Oct 23: With a 27 per cent market share, Chinese handset maker Xiaomi dominated India smartphone shipments in the third quarter of this year, Counterpoint Research said on Tuesday.

Xiaomi Redmi 6 Pro

India smartphone shipments during the July-September period of this year grew 24 per cent sequentially and five per cent year-over-year, the report said.

Xiaomi, which recorded its highest ever shipments in India in a single quarter driven by the new Redmi 6 series and expansion in offline channels, was followed by Samsung (23 per cent), Vivo (10 per cent) Micromax (nine per cent), and OPPO (eight per cent).

“India’s shipments surpassed those of the US during the quarter; the second time this has occurred,” said Karn Chauhan, Research Analyst at Counterpoint.

The top five brands captured 77 per cent share of the total smartphone market during the quarter, the report said, adding that the smartphone segment contributed to half of the total handset market during the July-September period of this year.

“The record shipments happened at a time when the Indian Rupee has hit a record low against the US Dollar,” Counterpoint Research Analyst Anshika Jain noted.

India, which now has over 400 million smartphone users, recently surpassed the US to become the second largest smartphone market in the world after China.

“The $150-$250 segment contributed to almost one third of the volume during the (third) quarter as many new products are launching at this level,” Chauhan said.

The launch of a new sub brand, Pocophone, also helped Xiaomi lead the India smartphone market in terms of shipments, the report said.

Samsung’s shipments were driven by the J series as the demand for J6 and J8 remained strong. Apart from this, the South Korean tech giant also launched the Android Go edition, Galaxy J2 core, giving it a much-needed offering in the sub $100 segment, the report said.

Vivo shipments reached their highest ever as it refreshed its V series with the launch of the V11 and V11 Pro.

Micromax was back among the top five brands for the first time in two years. Micromax, along with Reliance Jio, has won an order from the Chhattisgarh government under which it will be the sole supplier of five million smartphones to be distributed to women and students in the state.

However, shipments are likely to decline following completion of the order, the report added.

OPPO shipments also increased during the quarter driven by refreshed product lines, notably the F9 series.


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Proposed Khurja coal power plant overpriced, threat to Delhi’s air quality: IEEFA

The Khurja proposal relies on a prohibitively expensive 900-km-long rail haul to bring coal to the plant. Additionally, the market price of coal continues to increase globally.



coal powerplant
Coal Power plant Picture

New Delhi, Oct 23 : The state-run THDCIL’s proposed Khurja coal power plant in Uttar Pradesh would not only push up the cost of electricity at a time when renewable energy options are cheaper but will also be a threat to Delhi’s air quality, a report said on Tuesday.

THDCIL, formerly known as Tehri Hydro Development Corporation Ltd, is a joint venture of the Central and Uttar Pradesh governments with a 75:25 equity sharing ratio.

Releasing the report titled “The Khurja Thermal Power Project: A Recipe for an Indian Stranded Asset”, the US-based the Institute for Energy Economics and Financial Analysis (IEEFA) recommended that the 1,320 MW proposal should be re-evaluated against severe air pollution levels in Delhi.

Also, the real threat of government financing wasted on another expensive stranded asset, increasingly cheaper renewable energy options and India’s ambitious sustainable energy goals.

The Khurja project entails an investment of Rs 12,676 crore. While the first unit is scheduled to be commissioned in November 2022, the second unit would go on steam in April 2023.

The electricity users — the state and central governments — and project’s lenders should not be burdened with yet another expensive stranded asset at a time when local residents need cleaner energy options, IEEFA Director of Energy Finance Studies Tim Buckley told reporters here.

“Delhi already has the dubious reputation of having the worst air pollution of any city in the world. If the Khurja coal plant is built as planned near Delhi, this will increase the impact on local residents, emergency workers and the local government.

“The Khurja power plant was feasible when first proposed eight years ago in response to power supply shortages and outages across northern India, but technology has moved on,” he said.

According to Buckley, renewable energy generation in India is now cheaper than Khurja’s non-minemouth coal, with ongoing price declines prompting states, including Uttar Pradesh, to seek solar and wind options to meet incremental demand growth.

“The Khurja proposal relies on a prohibitively expensive 900-km-long rail haul to bring coal to the plant. Additionally, the market price of coal continues to increase globally,” he said.

“Our analysis shows any power generated at the Khurja plant would likely be sold for Rs 5.67 per kilowatt hours, while renewable energy prices today are only plus or minus Rs 3 per kilowatt hours.

“The economics of the project look dim. The Khurja proposal must be re-evaluated,” Buckley said.

Kashish Shah, IEEFA Energy Research Associate and co-author of the report, said India’s ambition to sustain double digit economic growth hinges on improving energy security and reducing the cost of power and that requires sensible investment.

“India is aiming to achieve 40 per cent of its electricity generation needs by 2030 from non-fossil fuel sources including wind and solar. As a coal-fired power station takes significant time to ramp up power generation, the Khurja power station cannot help with grid stabilisation and peak demands, one of the new requirements of the Paris commitments,” Shah told IANS.

“As the share of renewable energy options increase, India will need additional firming capacity and wider national grid inter-connectivity to integrate increasing amounts of variable solar and wind generation, and prevent frequency and voltage fluctuations that adversely affect grid stability.

“The long delayed, excessively expensive and redundant Khurja project should be cancelled before it becomes another expensive stranded asset in India,” he added.


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