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A new player in the housing market

By Amit - September 20, 2014

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Written by Sandeep Singh

Updated: September 20, 2014 9:47:46 am

The construction major NBCC is promising transparency, on-time delivery and green features.

The housing market in the country today is primarily driven by private sector developers and the government has largely restricted itself to the role of a promoter of housing schemes such as the Delhi Development Authority, the Maharashtra Housing and Area Development Authority and various other state housing boards.

There is, however, a government-owned company that is emerging as a player in the residential real estate sector. Hitherto, known for undertaking turnkey construction projects, the National Buildings Construction Corporation (NBCC) has set itself a target of 10,000 housing units for the general public across the country over the next five years. This comes at a time when real estate developers are yet to emerge from the market downturn.

“We have said that in the next five years we will develop a minimum of 10,000 units for general public but you will see this number getting revised every three months. We plan to substantially take this up and move in line with the government’s objective for housing for all by 2022,” said Anoop Kumar Mittal, CMD, NBCC.

Currently, NBCC is working on redevelopment of government residential buildings in New Delhi and has bagged redevelopment projects in Rajasthan, Orissa and other states.

Its group housing projects are spread across various locations such as Gurgaon, Ghaziabad, Bhubaneswar, Kolkata. Patna and Kochi. The company has a land bank of over 200 acres and has acquired land in Jaipur, Alwar and Raipur.

“We will raise our capacity and land bank substantially. We are purchasing land from different authorities, housing boards and state governments. We are also looking for surplus land of public sector units or sick units as they have land in prime localities not just in metros but also in tier II and III cities. We are targeting them and telling them to either sell them to us or enter into a joint venture with us as it will benefit everyone — NBCC, the PSU and public at large,” said Mittal.

Market observers feel that with NBCC emerging as a key player, and its expansion will fill the huge lacuna in affordable housing, and would also force private developers to take a relook at their practices of high loading (super built-up area, extra charges under various heads such as parking) and the general lack of transparency.

“The need of the hour is to have an organisation that understands and operates with the motive of not just making profits but of providing affordable housing as no private player wants to operate in that area because of low margins. We need more organisations like NBCC that work with the objective of developing houses,” said Gulam Zia, head advisory services, Knight Frank.

Does this mean that NBCC homes would be priced lower than that of private developers? Not necessarily, said Mittal, as the company would operate as any other developer and the projects would be priced at market rates. He, however, added that buyers would have several advantages when choosing to own a NBCC home.

“On rate front, while our prices are in line with market, there are a lot of indirect savings for the buyers. From the first day we are clear on what is super area, built-up and the carpet area. Then there is no loading of parking, club, etc. In our case the buyer will also not witness delays in project delivery as we are a cash-rich company. Most of the private developers have high debt,” said Mittal.

Industry experts say that NBCC’s entry may act as a disruptive force if it delivers quality housing and brings in transparent practices while dealing with the buyer. It could challenge the prevailing practices resorted to by the industry.

“If NBCC builds quality houses for the urban poor and the middle class with clarity on carpet area and no loading then the existing practices of high loading etc can be challenged and private developers too will be forced to follow such norms,” said Zia.

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