By Accommodation Bureau
Sundeep Jagasia, Managing Director, Shree Krishna Group (Guest Article)
With the implementation of Goods and Services Tax (GST) and the Real Estate (Regulation and Development) Act, 2016 (RERA), demand in the residential markets across cities remains subdued, but the affordable segment is seen as a bright spot driving growth in the coming months.
More than 50% of Indians in the market to buy houses opt for an apartment and majority of them prefer a 2BHK apartment according to findings of a five-city property buying trend compiled by an online portal.
Mumbai remains the preferred destination for home buyers as 96% of home buyers choose apartments over villas and builder floor apartments. This is further exaggerated in Mumbai as 51% home buyers prefer 1 BHK owing to escalating property rates in the city.
Recent research also shows that most buyers prefer the western suburbs and Navi Mumbai. It’s a buyer’s market and most prospective buyers expect housing prices to come further down, given the large inventory which is being held over by builders. There are more buyers for houses which come in the INR 20 lakh to INR 40 lakh range, but this segment has not adequately been catered to.
Earlier, most buyers would get bookings for projects at the very start to take advantage of the launch offers and lower prices. But a greater majority of wary buyers now move in to buy only when the project is nearing completion. The general practice is that buyers will keep buying at various stages of the construction. But since the buyers have been more cautious to part with their wealth, this has affected the cash flow situation for the builders and has been one of the main causes for the delays in construction. This is a direct result of a mismatch in the marking price by the developers and the perceived value by home buyers in the offerings.
As a result of these developments, more ‘branded’ developers are now considering “moving into or expanding” their portfolio in affordable housing, that addresses the housing needs of the lower or middle-income households as it is an attractive proposition for both developers and consumers as the demand is huge and largely unmet.
Developers are offering schemes such as interest subvention, possession-linked payment plans, price guarantee schemes and waiver of floor rise to defy the weak market conditions. Affordable housing buyers are being wooed by amenities such as a clubhouse, concierge service, rooftop pools, canopied walkways, gyms, community halls, which would usually be found only in luxury projects. Some are even marketing top of the line construction and fitting materials being used in these projects as USPs.
As per estimates, India will need more than 18 million affordable housing in urban areas by 2022. The affordable housing segment is now growing at a very rapid pace of 30 percent annually and is likely to be a $100 billion per annum market in the next five years.
(The views expressed by the author is his own)