Industry experts say reputed developers are only coming out with luxury projects in Mumbai, National Capital Region (NCR) and Bangalore. According to industry estimates more than 70% of the projects launched in Mumbai and NCR in past six months were marketed as luxury projects.
"In differential cost between a luxury apartment and other apartments in tier-1 is not much, so most developers are opting for luxury projects," said Thirumal Govindraj, head (western region), CB Richard Ellis, an international realty consultancy.
"Luxury projects have higher risk compared to affordable housing but often it fetches better returns," said the head of the real estate investment arm of an international finance company. "But only few developers actually sell the project completely in stipulated time."
However, some PE funds are focussing on affordable housing. "Affordable housing is thriving and getting good returns too, but the activity is centered around tier-3 cities and investment amount is very small in these projects," said Bikram Sen, CEO, Arthveda a subsidiary of DHFL that recently launched a Rs. 200-crore fund focussed on tier-3 cities.