Higher FAR, lower development charges and faster approvals may be needed to make affordable rental housing financially viable
New Delhi: The proposed Master Plan for Delhi (MPD) 2047 could give affordable rental housing a greater role in the capital’s future development, but real estate developers believe significant policy incentives will be necessary to attract private investment at scale.
Developers and industry bodies are reportedly looking at higher floor area ratio (FAR), lower development charges and greater flexibility in development norms to make affordable rental housing projects financially viable.
Developers seek higher FAR and lower charges
The economics of affordable rental housing remain challenging because developers typically operate on very thin margins. Industry representatives believe that without additional incentives, private developers may find it difficult to commit large amounts of capital to such projects.
Harsh Vardhan Bansal, president of the Delhi chapter of the National Real Estate Development Council, said that lower development charges, faster approvals and flexibility in development norms could help improve the viability of rental housing projects.
According to industry stakeholders, allowing developers to construct more floor area on a given parcel of land through a higher FAR could help offset the relatively low rental returns associated with affordable housing.
Land pooling seen as a major opportunity
Apart from development incentives, the real estate sector sees land pooling as an important mechanism for unlocking large parcels of land for private development.
Land pooling could potentially allow fragmented landholdings to be brought together for planned urban development, creating opportunities for larger residential projects and supporting the expansion of affordable rental housing.
However, industry participants believe that simply making land available may not be sufficient. Developers would also need predictable regulations, streamlined approvals and financially viable project structures.
Private capital will be crucial
The success of affordable rental housing under MPD 2047 could depend significantly on the ability to attract private-sector investment. With construction, financing, land and regulatory costs remaining high, developers may require a combination of incentives to make projects commercially sustainable.
Higher FAR, reduced development charges and faster clearances could therefore become important policy tools for encouraging private participation.
The challenge for policymakers will be to strike a balance between affordable rents for residents and adequate returns for developers, while ensuring that new housing projects are integrated with Delhi’s broader infrastructure and urban-planning requirements.
If the right incentives are put in place, industry stakeholders believe MPD 2047 could create a larger role for private developers in meeting Delhi’s growing demand for affordable rental housing.
