Indian Developers Surge on Special Status for Affordable Housing

(Bloomberg) -- Ashiana Housing Ltd. led developers higher in Mumbai after India proposed to give “infrastructure status” to affordable housing in the South Asian nation.

Ashiana Housing rose 20 percent to 173.25 rupees at 2:22 p.m. in Mumbai, Kolte-Patil Developers Ltd. added 14 percent and Ganesh Housing Corp. climbed 7.6 percent after Finance Minister Arun Jaitley said that “affordable housing will now be given infrastructure status, which will enable these projects to avail the associated benefits.” He was presenting the federal budget for the year starting April 1 to lawmakers.

The status would allow developers to be eligible for several government incentives, subsidies, tax benefits and most importantly institutional funding, Neeraj Bansal, a partner at KPMG in New Delhi, said in an e-mailed statement. Prime Minister Narendra Modi had announced a "Housing for all" program in June 2015 to provide homes for everyone. The government aims to construct more than 20 million houses across the country by 2022. On Dec. 31, Modi also announced rebates and interest waivers for home loans under the program.

Home sales have slumped since the government’s surprise November ban on some high-denomination currency notes brought spending to a virtual halt in a nation where 98 percent of transactions are cash based. Sales across eight Indian cities dropped 15 percent to 66.1 million square feet in the quarter ended Dec. 31, according to data from Liases Foras Real Estate Rating & Research Pvt.

To contact the reporters on this story: Anto Antony in Mumbai at aantony1@bloomberg.net, Pooja Thakur in Singapore at pthakur@bloomberg.net. To contact the editors responsible for this story: Sree Vidya Bhaktavatsalam at sbhaktavatsa@bloomberg.net, Peter Vercoe, Robert Olsen