The Resurgence of affordable homes and townships in India

Authored by Ashok Naidu – Director, Kumari builders and Developers   The real estate sector has been consistently see-sawing over the decade even though it is one of the most growing and globally recognised sectors of the Indian economy. Yet there are a lot of recoveries to be done to steady the ship. Rapid urbanisation is expected to offer significant opportunities for the real estate sector and infrastructure development in Indian cities. The government also provides more gravity to the industry since it has been one of the major contributors to the country’s GDP and employment. Home buyers began to lose their trust in the industry for a short period since builders were delaying projects and struggling to meet the demands of buyers that led the industry’s temporary downfall for a while. In order to steady the sinking ship the government took various measures like Housing for all by 2022, RERA act 2016, GST, Benami Act, etc. The introduction of RERA act increased the transparency level in the real estate sector between the buyers and the sellers and these measures gained back the trust of the buyers. Through Housing for all by 2022, the government made the homes available at an affordable price which has given a greater push to the industry to get back where it was earlier. Rise of Affordable homes After the launch of Housing for all, the affordable home segment has been on the upswing and is the only silver lining for the battered real estate sector right now. Affordable homes are gaining momentum within the peripheries of TierI, Tier II and even Tier III cities since there is a necessity to create and develop alternate economic clubs other than the urban areas. This market segment widely attracted first time home buyers, NRI, Young professional and also the lower income group within urban and semi-urban landscape who earlier faced various difficulties to buy a home but now is accessible to them as well. However, there is colossal potential in the affordable homes’ segments that is still untapped, attributed to the growing population and demand for affordable homes. The average age of first-time home buyers in the present times is ranging from 30 to 35 years. 2/3 of India’s population is under the age of 30 and within the next 5 years, the industry will witness gigantic demand for affordable homes from the group of millennials. The affordable home segment has witnessed the maximum number of launches within the rage of 40 lakhs in 2017 and 2018. The affordable housing segment has further been boosted by the implementation of Pradhan MantriAwasYojana (PMAY) which has brought back confidence among the buyers. Mid-segment accounted for 45 per cent of the total launches, with the affordable segment close on its heels with a 42 percentage share. Developers are showing a lot of interest in affordable and mid-segment housing which attracts customers more than any other housing segment. As per ANAROCK data, the new launches supply across top 7 cities is estimated to be 1,93,600 units by the end of 2018 which is an increase of 32% compared to 2017 which stood at 1,46,850 units. The segment was also given a significant endorsement during the recent interim budget by the waving of Property for second homes which will induce the buyers to invest in second homes. The government also proposed 5% GST without ITC (Input Tax Credit ) for, under construction houses, this will give more confidence to the builders to launch more affordable homes since the segment has more demand among home buyers. Townships The township project which was not well received in the past is now being eagerly awaited by the current generation.  The builders are starting to invest in township projects which are considered to be the future in the residential market. The township projects are expected to witness high demand within the next 2- 5 years. This resurgence comes in the wake of hectic lifestyles, busy schedules and long hours in traffic. The buyers prefer to have an integrated township which will have access to all their requirements within the periphery of their residences. The consumers are expecting quality life within the periphery of their residences and a holistic living environment. They expect that an integrated township should comprise of everything under the one roof;  residents gardens, school, play park, hospital, shopping arcade, entertainment spaces, restaurants, community centres, etc. People are seeking quality time with their families more than ever before. Only the township projects can provide such a lifestyle to the customer than any other project. The township project has become more affordable to customers in recent times after a few revolutionary reformatory measures were taken by the government. It encourages the builders as well to make it more affordable since the affordable segment has high demand in the market. Township projects are always planned in the exterior parts of the cities and interior congestion gets reduced. The suburban township project will be able to provide environmental homes and working places to buyers. We will have more projects in the coming years which is an encouraging sign for builders in India. The sector attracts FDI since the government has nodded 100% for such projects and banks are willing to give loans for the integrated township projects.