Mumbai: Realty developers, with their compact residential apartment offerings, are gradually shifting towards the affordable housing segment and many developers are now aligning their apartment configurations and supply with the budget ranges dictated by the demand.
Realty developers across property markets are building apartments with smaller configurations with the idea of making houses affordable by reducing average apartment sizes and thereby bringing down the price. Developers are focusing on customer-centric products rather than aspirational premium apartments by launching the right kind of supply at the right price.
Last year, around 44% of the total launches across top seven property markets, or 55,000 residential apartments units, were priced below Rs 40 lakh, showed data from ANAROCK Property Consultants. This trend of offering compact and affordable homes is expected to continue for some more time. “Affordable housing is the new poster boy of Indian real estate, with demand for affordably-priced homes easily putting all other segments in the shade. The incumbent government has pulled out all stops to make its ‘Housing for All by 2022’ a reality, and has heavily incentivized developers and first time buyers of affordable housing,” said Anuj Puri, chairman, ANAROCK Property Consultants.
Developers are paying a lot of attention to consumers’ requirements. The fall in average apartment sizes across all top seven cities is a clear indication that developers intend to make houses affordable for buyers by reducing average apartment size instead of lowering capital values.
While reducing property prices may be a tricky and difficult decision for developers, the call to alter apartment sizes as per the needs and spending power of buyers is relatively easier.
“With modified configurations, we can improve the efficiency by focusing on what are consumers’ needs and requirements. One thing is sure: no homebuyer is interested in space wastage. In the backdrop of rising input costs and various premiums and levies that need to be paid, per sq ft pricing is not completely controlled by builders, but offering smaller configurations can bring the total price down and help in propping up sales,” said Ashok Chhajer, CMD, Arihant Superstructures, which is focusing on acquiring new projects in MMR while targeting ticket sizes between Rs 20 lakh and Rs 25 lakh.
With a sustained rise in property prices across the country between 2005 and 2008, homebuyers’ affordability has been challenged and the situation continues even now despite lower home loan interest rates and more supply due to high land prices and other charges. Based on real-time feedback from property buyers, developers have also been tweaking their strategy to attract good response from homebuyers.
“More than half of the residential sales, over the past one year, have come from this segment of the low-cost and affordable housing. The government’s intervention through incentives and sops for developers as well as homebuyers has proved to be a catalyst for both right supply and demand, too,” said Pankaj Kapoor, MD, Liases Foras Real Estate Rating & Research.
Affordable housing has been attracting private developers and financiers over the past few quarters in the backdrop of the government’s decision to grant infrastructure status to this segment.
The government’s efforts to enhance the supply of affordable housing units by offering tax incentives and sops to realty developers has started yielding results. More developers and bigger brands, hitherto known for their premium projects, have also ventured into this segment, while existing players are scaling up their plans. This is evident from the rise in the number of affordable housing project launches in over the past one year.
According to Puri, the inherent demand in this segment is virtually limitless but needs to be tapped intelligently and not all players have the requisite expertise in creating mass housing.
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