Affordable housing is the next power house of real estate

The affordable housing segment has not only given a new lease of life to the residential sector, it has also altered the market dynamics.

Affordable housing is the talk of the town owing to favourable policy announcements and tax benefits announced by the Modi government over the past three years.

Some of the policy initiatives include "Housing for all by 2022", "Pradhan Mantri Awas Yojana" (PMAY), grant of infrastructure status to affordable housing, among others, which allows buyers to purchase their dream homes by taking small-ticket home loans.

"Developers, on the other hand, have also received funding at lower rates under the infrastructure status that will induce them to construct more affordable homes in the country. The affordable housing segment will command a decent amount of share in the total residential sales due to increased participation from private players and government support. There is no doubt that India is facing a shortage of housing that can be met only by affordable housing," says Avnish Yadav, deputy general manager (residential services) at Colliers International India.

Industry experts say that real estate has remained unorganized and unregulated for many years, and a majority of people were unable to invest in the sector. "The affordable housing mission has now gained momentum as both the government and financing institutions have put in motion various policies, benefiting the unprivileged section of the society. Due to these reforms, the real estate sector is likely to recover soon and will also regain the trust of buyers. The positive impact of the government policies is visible as more and more people are turning up to buy affordable homes," Pradeep Aggarwal, Co-founder and Chairman of Signature Global, said.

Talking about the growing need for affordable housing, Brijesh Bhanote, CMO of Paras Buildtech India Pvt Ltd, says, "With the rapid pace of urbanization, rural to urban migration and constraints in supply, the requirement for shelter has been growing, especially for the middle and lower-income group of people. The scope in the affordable segment is immense as there has been a shift in demand from big-ticket size purchases from investors to end-users and potential homebuyers who mostly look for budget homes. This segment of housing is going to be the next big thing in the future as developers are also showing keen interest in taking up these projects."

Vineet Relia, Managing Director of SARE Homes, says: "Affordable housing is a necessity that needs to be fulfilled to bring back the real estate sector on track. The market is flooded with the high-end luxury housing, but the segment of affordable housing is evidently lacking in a few states. Once it gathers pace, affordable housing will not only enhance the basic quality of life, but also make good economic sense. Thankfully, affordable housing is drawing in lots of buyers as well as investors and realty majors are looking at enhancing their presence in this segment also."

On the flip side, however, the affordable housing sector involves numerous challenges, including lack of availability of land, rising construction costs, regulatory issues and lack of home finance, which impact the ability of buyers to purchase houses in the organized sector.

"Many developers are now eyeing this space due to huge demand and incentives offered by the government; also, these projects are located at leapfrogged locations that offer land parcels at economical prices for such projects. While these locations may offer cost-effectives homes, the lack of physical and social infrastructure here remains a concern," says Avnish Yadav.

Rising land costs are also a big issue.

"With the government granting a slew of incentives to the affordable housing sector, it can be considered as the future of real estate. However, the government needs to look into the issue of rising land costs and should put in place a single-window clearance mechanism," Sumit Berry, Managing Director of BDI Group, says.

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