SRZs would help boost real estate sector’s affordable housing projects and create thousands of jobs in the country, says Credai
Real estate developers are seeking government approval for setting up special residential zones (SRZs) on the lines of special economic zones (SEZs), to help boost affordable housing in the country.
The Confederation of Real Estate Developers Association of India (Credai) chairman Kumar Gera told Financial Chronicle that SRZs would help boost the real estate sector’s affordable housing projects and create thousands of jobs in the country. “It is a viable and compelling solution to India’s affordable housing crisis”, Gera, who is also chairman and managing director of Pune-headquartered Gera Developments, said.
India has a workable model in place in the form of SEZs, but not in the housing space, which could be effectively applied with some modifications to real estate, Gera added. The basic purpose of an SEZ is to bring in economic prosperity to the region by creating conditions that attract establishments to set up organised commercial micro markets.
“These conditions, in the form of waiver of various duties, exemptions from taxes, state and central levies, create the right reward management systems that motivate investors, developers, state and central governments as well as other beneficiaries to invest in land-use plans and contribute to the economic prosperity of the region”, Gera said.
At present, the pan-India average rate per sq ft for residential apartment is between Rs 2,700 and Rs 2,900, of which Rs700 per sq ft, which is little over 25 per cent, can be directly attributed to various local, state and central duties and levies as well as direct and indirect taxes, such as value added tax, octroi, stamp duties and so on.
The industry should be exempted from paying these taxes, Gera said. The government should decide the size of affordable houses for the masses and allow 400-500 special residential zones (SRZ) to come up in the country. He said between five and 10 such zones could come up in any of the tier I, II, III cities.
“An SRZ could be a notified geographical region that is free of domestic taxes, levies and duties (both for its creation, operation and maintenance) with special development rules to promote large- scale, greenfield, affordable housing projects for the country’s masses. The proposed SRZs would have a prescribed minimum number of dwelling units with maximum prescribed size, and each of them would require adequate social infrastructure, including schools, medical facilities and so on,” Gera said.
Put simply, SRZ is a special zone that contains catchments of residential properties, which have been accorded fiscal benefits in order to bring down the cost of housing and create a massive deliberate urban agglomeration that services the local commercial activity and vice-versa.
Pradeep Jain, chairman, Parsvnath Developers and member, Credai NCR, said: “We are proposing that the maximum permissible area for a house in the SRZ should be 1,000 sq ft so that the lower middle class is able to find a decent place to live in at affordable rates.” The onus of developing the supporting infrastructure, such as schools, hospitals, shopping complexes and roads would lie on the developer, he added. The idea is to create an inter-dependent living system that is not only self-sufficient, but also has the potential to grow and inject growth into geographical areas around the SRZ.
After the SEZ Act, 2005 came into force, 405 SEZs totalling up to some 68,000 hectares (11, 6,320 acre) have been given formal approval.
The SEZ exercise, Gera said, would help in creating an SRZ Act. The massive growth of SEZs in such a relatively short period was made possible only by altering specific fiscal policies for the region and by simplifying the approval sanction processes and creating single- window clearance and administration systems.
Similarly, if the government creates similar concessions for specific geographic regions, earmarked for developing large sustainable developments for small residential units, it would result in massive spatial reorganisation of the urban population, Gera said.
Courtesy: Finance Chronicle dated 08/01/2009
