DLF plans middle-income housing

DLF Ltd, which started off as a middle-income housing developer before becoming India's largest realty company, will revisit its humble roots with projects for the salaried class.

The company's middle-income houses, planned initially in cities like Bangalore, Chandigarh, Chennai, Indore and Kolkata, would typically be 3-bedroom apartments and would cost about Rs 45-50 lakh (Rs 4.5-5 million).

"We will be focussing on middle-income housing. In fact, (our projects in) Gurgaon started as middle-income houses and became premium," DLF vice chairman Rajiv Singh said.

Singh also said he saw housing loan interest rates stabilising in the near term and falling in the days ahead. "Upper single-digit would be the right rate, considering the future of the economy," he said, when asked what rate he felt would not hurt the realty sector's growth.

The company would start work on the middle-income housing projects in the current quarter (July-September) and expects a revenue of Rs 8,000 crore (Rs 80 billion) from the segment once projects are on full steam.

"We will keep adding new locations," he said, when asked whether the company had any project in the segment for the national capital. "In Delhi, we have acquired land, but the project is still a couple of years away."

DLF expects middle-income housing projects to account for 20 million square feet of the 50 million sq ft it plans to develop ever year in the years ahead.

"By value, commercial - retail and office -- will contribute 55-60 per cent of our business, high-end residential projects 20 per cent and middle-income housing 20 per cent," Singh said.

The company's land bank as of June 30 has a development potential of 625 million sq ft.

On whether there was overheating in real estate sector, which apparently prompted Reserve Bank of India to tighten money supply to check inflation, he said: "Overheating was on account of shortage of supply."

He said there was some hesitation from buyers after interest rate hikes, but "the rate hikes are behind us."

"Are prices rising? No, because of hesitation due to interest rate hike. Are they (buyers) getting a much cheaper deal? No."

He said the location for middle-income housing project would be determined by the economic activity of a particular region. DLF is carrying out rehabilitation projects in Mumbai, but ruled out entering the low income housing, saying it did not make for a business proposition.