Concentrate On First Homes, Says Delhi Minister To Developers
For a large share of Indians, 'affordable' is the magic word and also, creates a demand for it, too. In times when the sector is moving towards a slump given that the demand and supply are not in tandem and oversupply of high-end projects beyond the reach common man. At a recent conference on Indian Real Estate- Unfolding the new era of growth, Satyendra Jain, Minister of Urban Development, Health, Industries, Home, Public Work Department, Power, Transport, Delhi government said that developers should concentrate where the demand is ─ the affordable segment and not the second-home segment which is by far only for those who are looking at investing their surplus cash. The majority is still looking for homes with basic facilities.
The urban deficit of affordable homes is humungous and both the government and real estate developers are working towards bring down this gap. However, it will take some time before the construction of affordable homes picks pace to serve a population that is growing at an average of 2.1 per cent every year since 2015.
Developers have not lost hope either. Niranjan Hiranandani, MD, Hiranandani Group said, “Low cost housing will be a success in India. But it cannot be answered, as to when it will be a reality. But yes, it is achievable and there is a huge demand for it. This is also not the right year to assess. We have to let the market stabilise after the impact of demonetisation, GST, RERA and the Insolvency and Bankruptcy Code.” The four reforms together were addressed as 'tsunamis' within the sector.
Indians cannot get over owning homes
“India is the only country where we talk about ownership housing. Half of America resort to rental housing from birth to death with absolutely no problems,” said Hiranandani. In India, despite the growing inventory, the private developers and the government are building more due to the price dynamics in the market.
However, this is not easy. “Simply reinventing mid-income housing into budget housing is not a real answer in most cases, as the project may be in a location which commands higher land rates. This means that the buyer ends up paying premium location charges, which is not feasible for budget housing. Also, some developers simply do not want to be known for affordable housing projects because they have worked hard to build up a 'premium' label for their brand,” says Anil Pharande, chairman, Pharande Spaces.
What do most Indians own?
The Census of 2011 showed that there are as many as 86.60 per cent of apartments owned while 11.10 per cent are rented. Do not go by the numbers alone. Over 37 per cent of these is one-room accommodations. 46 per cent of these homes is mud homes too. Here lies the necessity of affordable homes or the first homes.
Are developers prepared to address this?
Pharande said, “Creation of Special Residential Zones on the lines of SEZs, with all the implied benefits and tax breaks for both developers and buyers of housing in such zones would be helpful. The Government can and must consider this option if it feasibly intends to realize its aim to provide Housing for All by 2022.”
Where is the land to build? “One solution to boost the available supply of affordable housing which requires determined Government intervention is the release of land held by various Government agencies such as the Railways Authority of India. There are huge land parcels available in areas where affordable housing is needed the most,” adds Pharande.