Affordable houses, unaffordable locations | mydigitalfc.com
While developers have come to accept it as a fact that affordable housing holds the key to realty revival, there exists a huge gap between the buyers’ preferences and project locations, which grossly lack the required physical infrastructure, according to a report.
However, the much tom-tommed mantra of affordable housing may help realty firms in Kolkata and Pune more than their counterparts in Mumbai, National Capital Region (NCR) and Bangalore. Reason? Kolkata and Pune offer the maximum number of affordable locations than the other three, a research report by property consultancy Knight Frank says.
There is a flip side to it, though. The report indicates a sizeable gap between the preferences of the buyers and the projects under development. Although a number of affordable projects have been announced, the locations do not have adequate infrastructure, which is of utmost importance for the proper development and successful implementation of affordable housing.
Knight Frank’s research report on ‘Affordable Housing’ was based on what they called "requirements of the Indian middle class" with household income of Rs 3 lakh-Rs 10 lakh per annum across 1,400 households in seven cities — Mumbai, NCR, Chennai, Bangalore, Hyderabad, Kolkata and Pune.
The report reveals that good connectivity to workplaces is the most important factor influencing buyer’s decision in selecting the location of their residence. This is followed by infrastructure and potential for future development. Besides, customers are more concerned to know whether the project has uninterrupted water supply and sufficient power back-up and effective security systems than frills such as gymnasium, swimming pool and the like.
The affordable housing segment may be fraught with challenges, but it surely offers developers an opportunity to tap a huge realty market that is estimated to cross over Rs 300,000 crore by 2011. One can gauge how mammoth the scope in this sector is from the fact that more than 2 million housing units would be required by 2011.
Mumbai, with a market size of Rs 647,00 crore, has a housing requirement of 404,673 units, which would need 324 million sq ft. Similarly, NCR requires 547,434 units that would be spread over 438 million sq ft. It market size is expected to grow to Rs 876,00 crore. On the other hand, Bangalore’s 327,694 units would come up over 262 million sq ft and its market size would reach Rs 524,00 crore by 2011.
Experts say that the size and value of units varies from city to city. “In larger cities such as Mumbai, units measuring 1,000-500 square feet can by no yardstick be considered 'affordable',” says Anuj Puri, chairman & country head, Jones Lang LaSalle Meghraj, a property consultancy.
On the outskirts of Kolkata, however, housing units of 450-600 sq ft can be had for Rs 5.5 lakh. Same is the case with Pune, where a small-sized, 2BHK house on the peripherals can come at Rs 6 lakh.
According to the report, while those earning between Rs 3 and 10 lakh would drive demand, the largest contributor to this market size is expected to be the group with an annual income of Rs 3-6 lakh. Interestingly, buyers in the Rs 8-10 lakh income group quoted a more conservative budget for a house than those in the Rs 3-6 lakh group.
This reflects the extremes on which higher income group consumers operate during boom and recession periods. The report also throws up interesting facts about the expected timelines of deals. Over 32 per cent of these middle-class, potential buyers plan to purchase a residential property in 6-12 months while 7 per cent of them would
like to own a dwelling unit in the next 6 months.
Jayakar Jerome, managing director of Bangalore-based Provident Housing, the affordable housing wing of Puravankara Projects, says, "Our objective is to cater to the middle class buyers who just cannot afford homes that are available in the market today. Primarily, we are looking to tap government employees, young working couples as well as those who are retiring soon.”