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Thu, May 7 02:51 AM

It is perhaps the 'Nano effect', but the low-cost model seems like it is becoming the new business mantra of the Tata Group. Weeks after launching the much-hyped Rs 1-lakh car, another Tata Group company today unveiled an ambitious project called Shubh Griha, which will offer low-cost homes at under Rs 5 lakh across the country to tap the large and lucrative market for affordable houses.

The first property under this project of the Tata Housing Development Company Â- already being nicknamed 'Nano Housing' Â- will be launched in Boisar, a distant Mumbai suburb, and will be followed by construction across tier I and tier II cities, with Delhi-NCR and Bangalore on top of the list. Boisar is about 100 km, or a three-hour train ride, from Churchgate station in South Mumbai.

The Boisar apartments are priced at around Rs 1,400 per sq ft and will come in three unit options of one small room plus kitchen, one large room plus kitchen and one bedroom-hall plus kitchen in configurations of 283 sq ft, 360 sq ft and 465 sq ft respectively. The company promises to offer them in a price range of Rs 3.9 lakh to Rs 6.7 lakh.

"We will have 1,000 flats in the first phase of the project. The sale of forms for booking will start on May 11 and customers can book the flats for a price of Rs 10,000," said Tata Housing managing director and CEO Brotin Banerjee. Application form booklets can be bought for Rs 200 from SBI branches between May 11 and 25. Bookings for the flats will start from June 1 and continue till June 15. Flats will be allotted through lottery and unlucky applicants will get their booking amount back.

"Research shows that India today faces a total shortage of 24.7 million dwelling units, with more than 70 per cent of this shortage in the middle- and low-income groups. Shubh Griha is well placed to address these identified needs," said Banerjee. "The company plans to launch housing projects in Delhi-NCR and Bangalore in the second and third phases. The price of flats for those projects will vary from that in Mumbai but will be under Rs 5 lakh," he said.

While the pricing of the Boisar flats sounds like a dream in a city where the average price of a house is around Rs 70 lakh, the location might prove to be unattractive, some real estate experts said. But the recent overwhelming response received for MHADA flats in Mumbai and DDA flats in Delhi was a testimony to the huge untapped demand in the affordable homes segment and private players such Tata were targeting it.

A report by HDFC Securities on the housing stimulus package, which offers home loans of less than Rs 20 lakh at concessional rates, says such packages mean little unless house prices become affordable and the area of houses are lowered to below 800 sq ft. Developers also said that the Tatas are not the first to enter this segment, pointing out recent launches in Mumbai such as Tanaji Malusare City in Karjat, Rustomjee's Global City in Virar, Neptune's Swarajya in Ambivli, Nirmal Lifestyle's project in Shahad and Lodha's Casabella project in Dombivli.

Real estate consultant Knight Frank India chairman Pranay Vakil said developers are heading to the periphery to create affordable housing as land in the city comes at a premium. "In 2006-08, land in Mumbai was being acquired at the cost of a finished product. So, in such cases it is hard for developers to go in for affordable homes. Even those who are going back to the mantra of sizing and pricing by going in for affordable housing projects are not doing so for the love of it. The recession has done a lot of good, in the sense that the market has become a buyers' market," he said.

Rs 5 lakh

The price for Tata's low-cost house

Rs 10K

The booking price

465 sq ft

Area of the largest unit, which offers one bedroom-hall plus kitchen

Tata's Low Cost Housing