Affordable housing is here to stay and there is something for every segment of buyer, says Shilpa Sachdev

The buyer is back as the market reflects a revival mode — but the concern uppermost on everybody’s mind in the realty sector is whether the trend towards affordable housing will fizzle out. Experts, however, have allayed these fears holding that the momentum on affordable housing will continue, and with very good reason.

Ashutosh Limaye, associate director (strategic consulting) at Jones Lang LaSalle Meghraj says: ‘‘Considering the dire need for low-cost homes in India, the demand for affordable housing will sustain for decades to come. The shortfall at this point in time is still in the range of millions, and India’s evergrowing rate of urbanisation will act as a constant demand catalyst. The business model of affordable housing is based on larger volumes, while that of upper-income housing is based on higher margins. Developers have realised that the affordable housing segment has the biggest and most protracted demand. In the future, while the rapidly improving economy may encourage them to increasingly focus on higher income housing, they will strive to incorporate an affordable component in most large residential developments. Both affordable and higher income housing will continue on parallel paths, since they represent two entirely different and equally valid business propositions to developers.’’

Anil Mittal, director of Mittal Builders, believes: ‘‘Affordable homes will continue to be in the limelight for a year and a half more after which it will seamlessly blend with other offerings. Today, there is a lot of talk about affordable housing, which will neutralise with time. But there is a definite segment asking for affordable homes. The demand for them was always there but today it has become the new mantra. Even back in the 1980s, when we launched our projects at Thane and Naigaon, the demand for affordable homes was pretty much there. But then the interest rates shot up and people lost the confidence in taking loans.’’

Although the government has worked on making home loans more affordable than before, there is still a lot to be done. Limaye says, ‘‘Our inner cities do not have sufficient infrastructure to warrant the higher FSI levels that make affordable housing viable for builders. Initiatives to put in such infrastructure and also to make cost-effective land allotments would help to sustain affordable housing.’’

Mittal adds, ‘‘The clearance process needs to be improvised. The repeal of ULC Act should have resulted in release of land but nothing has been done on that front too. These land pockets when released will enhance the scope of providing more affordable housing options. The repeal has not benefited anyone as yet but there is hope that it will bring more land that can be used for affordable housing projects.’’

Also, the end user should be given more relief to increase the viability of affordable home projects, feels Rajan Bandelkar, partner in Raunaq Group. He says: ‘‘Compared to last year, when we did a business of 10-15%, the sales this year have been at least four times more. Almost 90% of the demand comes from the affordable homes segment. The developer fraternity has looked at affordable homes with a serious thought but the government too should do the needful. For example, in Hyderabad, there is no stamp duty on flats up to 1,250 sq ft in area, but here there are plans to introduce VAT too over and above the existing stamp duty of 5%.”

The trend of developing large townships with mixed usage homes would continue to boost this segment. Apart from the developers, the government will also have an important role to play here. Samantak Das, national head (research) at Knight Frank India, says, ‘‘Until the fifth plan, the government of India was dutifully providing homes for various segments through government housing departments. But then it became the facilitator by providing the infrastructure, legal and administrative support. Implementation laws were misused by the housing industry themselves. Lack of knowledge and professionalism compounded the problem.’’

‘‘But the government is now getting active and planning to make such townships. They could show the way to private developers by using such technologies and bringing the costs down by the logic of sheer economies of scale,’’ Das informs.

The government is working on make funding accessible to both the buyers and the developers. It is also planning to bring a regulatory body into the framework to make affordable housing a successful reality in the long run.

There is clearly a great demand for affordable homes across various segments. And with the developers and the government working jointly to stimulate it further, the future looks quite affordable!