The government’s Affordable Rental Housing Complexes (ARHC) scheme, a central government initiative, will be executed on a public-private partnership (PPP) basis to private entities on a 25-year lease, who will offer houses at low rental charges to members of economically weaker sections (EWSs) and students.
Civic body leases to developers
The ARHC will be executed on two models –Model 1 format will consist of vacant houses owned by the local authorities like AMC and SUDA which will be given to private players to run, maintain and give out on rent. Model 2 will require the developer/ party to construct the dwellings with their investment on land and construction and then rent and manage the properties. Since the burden of investment is on developers, Model-2 format will allow 50% extra FSI (Floor Space Index) to reduce the overall construction cost.
We have got inquiries for 1,000 houses in Ahmedabad, Surat and Vadodara. We are hopeful that the facilities will be operational soon in these citiesLochan Sehra, Secretary (Housing & Nirmal Gujarat), Urban Development & Urban Housing
Model -1 format is gaining more traction among developers, with the authorities beginning to get bids for the tenders. Model 2, however, has seen a lukewarm response and is yet to attract bidders.
Surat Urban Development Authority has executed its first project under the ARHC scheme which will get operational soon, officials said. SUDA chairman and SMC commissioner Banchhanidhi Pani said, “This is the first project in India under ARHC scheme. We are looking forward to having projects in the city limits too, both under Model-1 and 2.” Civic authorities in Ahmedabad and Vadodara have also issued tenders for housing projects .
AMC floats tenders
The Ahmedabad Municipal Corporation (AMC) has floated two tenders under Model 1.However, the technical bid evaluation is in progress and it is yet to award the contracts. AMC commissioner Mukesh Kumar said, “Two companies have registered for the tender for a total 1,376 houses, of which 352 houses will be built in Thaltej and 1,024 in Bodakdev.”
Sources privy to the development said there has not been much response from developers for the Model 2.
Therefore, the period has been extended till March 2021. Developers feel Model 2 may not be very attractive as the cost of the project will turn out to be much higher than the returns they can expect in the ‘affordable rental’ scheme.
Leasing option better, constructing unviable
ANREDCO president Suresh Patel said, “Model 1 may click with the bidders, but Model 2 doesn’t look viable as the cost of the land is very high and so is the construction cost as against the returns expected.”
Some realty experts suggested that the government should get into joint ventures by offering reserved land to developers for such projects and offer 100% FSI for free.However, the affordable rental scheme is expected to do well in industrial areas like Sanand, Kalol and Santej.