The current economic scenario may have forced developers to switch over to affordable homes to attract buyers, but prohibitive land prices and rise in other input costs have raised doubts on whether the demand for budget and affordable homes could be met at all.
According to a survey by online data and analytics search firm Prop Equity, there is a deficit of 95 per cent in the Rs 10-20 lakh home price range while the deficit is 65 per cent in the Rs 20-40 lakh budget segment in India's five major metropolitan cities.
According to the Eleventh Five Year Plan the fastest growing value bracket is between Rs 10-25 lakh. But in today's context there are clearly no houses in this bracket available in a city like Mumbai.
"While the concept of affordable housing seems to be the obvious answer to the current demand-supply gap, its execution remains complicated due to the unclear policy framework," said Samir Jasuja, founder & chief executive officer (CEO), Prop Equity, in a recent report on affordable housing.
"To make affordable housing a success in India, the government will need to incentive the development community through cheaper land acquisition, awarding higher floor space index, timely regulatory approvals, infrastructure development, easier home loans and interest rate subsidies to motivate them to participate actively and aggressively in this segment," he added.
At a recent realty summit held by the Federation of Indian Chambers of Commerce and Industry (Ficci), experts had concurred with the view. But the much-hyped affordable segment of housing seems to be plagued with either being unaffordable or unfeasible.
In September, Prop Equity had released a study on the growing gap between demand and supply in the affordable residential sector after analyzing over 6,000 projects being executed by over 2,500 developers across Mumbai Metropolitan Region (Mumbai, Thane), National Capital Region (Delhi, Gurgaon, Noida, Ghaziabad and Faridabad), Bangalore, Chennai and Hyderabad. There is a demand for over 26.53 million houses in the budget and affordable housing segment across various socio-economic segments. And approximately 99 per cent of this demand comes from the economically weaker sections, low income group and middle income group segments.
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The gap between supply and demand can be attributed to the low interest from private developers to launch budget homes due to low margins, PropEquity said. "MMR and NCR have portrayed the maximum deficit ranging between 90 per cent - 95 per cent," it added.
Meanwhile, the uncertainty bogging the global economy has also clouded the realty sector. A report by real estate consultancy DTZ says the available capital for global real estate investment has dropped by four per cent in 2012 to $316 billion from $329 billion in 2010, the first reversal of growth since 2009.
"In India at a cumulative level, FDI in real estate has attracted close to $10.7 billion over the past decade. However, over the past two to three years, the level of inflows has been declining because of overall perception of the industry taking a beating, land acquisition skirmishes and rising input prices, thereby dampening the investor mood," said Anshul Jain, CEO, DTZ India.
Courtesy: Mail Today
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