Cross-subsidizing for the lower-income category, which accounts for 15% of the project size, the public-private projects operate on thinner margins (per unit), says Neotia.

The attraction, he says, lies in scale. Depending on the availability of land with the government, these projects can also cash in on prime land that comes relatively cheap, he admits. To be sure, the low land prices may not be sustainable in future. He and other developers insist that the projects are increasingly having to work with land bought at market price. This is particularly true of Rajarhaat. "When we avail land vested with the government, we are offered long-term payment plan," says Rahul Todi, managing director, Bengal Shrachi Housing Development Ltd.

In terms of pricing, the public-private partnership projects, given their branding, are defining the market price in certain places which are new to branded properties, says Abhijit Das. Neotia says the projects more or less keep with prevailing market price, when it comes to pricing of the high- income group housing units.
Todi, on the other hand, insists that the JVs are actually helping rein in the price. As a case in point, he says in New Town, the public-private projects are selling their high-income group apartments at Rs2,300-2,500 a sq. ft, while stand-alone private players such as Unitech Ltd, which is setting up a residential project on 100 acres, are selling at Rs3,000-3,500 per sq. ft.
In a state where real estate development was viewed with suspicion and run by fly-by-night operators, the participation of the state government has helped infuse life into the sector because low and middle -income groups are willing to risk their savings on government partnered homes.

"It renders the much-needed credibility factor to a real estate transaction," says Todi.
Market observers such as Jones Lang LaSalle say that this segment will continue to drive the branded market, with the government steering things with a socialist approach. The Kolkata Metropolitan Development Corp. has put in place an escrow account into which it posts all its revenue surpluses from the public-private partnerships. The money from this account is dedicated for building basic infrastructure around the city.