After almost three years of slow sales, real estate developers are shifting their strategies towards building more affordable houses to catch the latest trend in home buying. Launch of affordable homes across India’s top 8 cities nearly doubled in the first half of the calendar 2016, while that of high-end projects have slowed.
Between January-June 2016-17,130 affordable housing units were launched across India’s top 8 cities, a 97% rise over 8,698 units launched in the same period last year, according to Cushman & Wakefield. Houses in the Rs 20-50 lakh bracket (up to Rs 70 lakh in Mumbai) are considered as affordable homes.
Launches of high-end residential units in the Rs 1.0-2.5 crore (Rs 2.0-5.0 crore in Mumbai) declined 29% to 7,525 units in the six months period, compared with 10,662 units launched across these cities a year ago. Maximum launches were in the mid-segment where 36,267 units were opened in the first half, compared to 32,997 last year, up about 10%.
This is a directional shift in trend as high value homes are always seen as economy resistant where the rich were seen as buying or investing in property irrespective of any slowdown.
Analysts say the rise in the launch of affordable housing projects is due to a steady demand in this segment in cities such as Bengaluru, Delhi-NCR and Mumbai.
“It is heartening to see that demand for this segment, which was neglected for a very long time, is now being catered to as this forms a very large segment of latent demand,” said Anshul Jain, MD, India, Cushman & Wakefield.
In Mumbai, overall launches surged 72% in the first half of the year at 12,413 units, which majorly consisted affordable and mid market homes. While high-end launches declined 53%, there were no new luxury housing units launched in Mumbai in the six month period, data showed.
Nearly half of the affordable homes launched in the same period in Mumbai, were in the distant suburb of Ambernath in Thane district.
The NDA government has been pushing for housing for all by 2022 and analysts say this will drive the demand for affordable homes. An earlier report by KPMG had estimated that 70% of the urban housing need was in the affordable segment and almost 11 crore houses will likely have to be built by 2022 at an investment of $2 trillion, to achieve the government’s vision.
Analysts expect affordable housing project launches to continue to only grow further driven by the demand, lesser time required for construction compared with mid-to-high end housing and government incentives for such units.