Residential Enclaves on the Lines of SEZs Proposed To Beat Slowdown

April 22, 2008	(1 votes, average: 2 out of 5)  Loading ...
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After special economic zones (SEZ), it’s now the turn of special residential zones (SRZ). The government is considering a proposal from real estate developers to set up SRZs outside the main cities. These SRZs are also proposed to be given tax benefits on the lines of SEZs. Developers say SRZs would help them build and sell affordable houses for as low as one-third of the existing price to low-income groups, although SRZs wouldn’t be limited to low-income houses alone.

Commerce minister Kamal Nath has already had talks with real estate developers regarding setting up of SRZs. “The special residential zones have been conceived by the developers on the lines of SEZs with tax benefits and single-window clearance. The proposal is being actively looked into by the government. The government would require time to devise the modalities as tax incentives to SRZs would mean an additional burden on the exchequer,” a commerce ministry official said.

According to the proposal, an SRZ would be spread over at least 500 acre. The land would be acquired by developers from landowners for a negotiated price. The development will be done by the company, but the onus of building the road linking the SRZ with the main city will fall on the government.

“Houses have become unaffordable for a large segment of the population as prices have shot up in the past three years. If the government allows us to set up the special residential zones, we will be able to meet the acute housing shortage in the low-income segment,” Parsvnath Developers chairman Pradeep Jain said.

“A house built a little away from Gurgaon may cost Rs 7 lakh in an SRZ compared to the existing cost of Rs 20 lakh,” says Mr Jain, adding that exemption of tax, which comprises around 27% of the present house cost, availability of cheap land away from the city, and faster clearance through singlewindow will together bring down cost substantially. At present, obtaining all clearances from the government for building a housing project takes around two years, according to property developers.

The entire proposal is based on the developers’ objective to provide low-cost affordable housing to the low-income population. But SRZs would also have high-end houses. Above all, the biggest apprehension is that these cheap houses, as and when they are built, may be booked by high-income individuals. “This is a challenge the SRZ will face. The government will have to bring in some regulation to ensure that the houses go to the intended people,” says Omaxe CMD Rohtas Goel, who is also the president of National Real Estate Development Council.

News Published Under:   Real Estate India, Special Economic Zones |

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