According to a recent report by PropEquity, absorption levels for affordable houses have shown a decline, while there has been a demand surge for mid-segment apartments  Affordable housing, which remained the thrust in 2009 and helped developers (including SMEs and prominent players) tide over the real estate slump, is currently witnessing a slowdown in absorption levels. As the markets started maturing, customers moved up the value chain, bringing downturn for affordable or low-cost housing, feel industry experts and analysts. In a recent poll conducted by ConstructionBiz360, general public also feel that affordable homes are currently losing buyer interest as a record 100% answered in the affirmative.
PropEquity study
According to a recent report by the New Delhi-based realty research firm PropEquity, absorption levels for affordable houses (priced under Rs 35 lakh) have shown a decline, while there has been a demand surge for mid-segment apartments (priced between Rs 35-75 lakh).
Developed during the period between third quarter of 2008 and first quarter of 2010, the report covers 13 Indian cities, comprising Gurgaon, Mumbai, New Delhi, Noida, Navi Mumbai, Greater Noida, Chandigarh, Bengaluru, Chennai, Faridabad, Mohali, Ghaziabad and Thane.
Of these 13 cities, close to 9 have witnessed rise in mid-segment absorption. In addition, 6 cities have shown an upward movement towards the mid-segment housing in case of new launches. For instance, analysing the trend in Pune, the report shows that absorption rate of mid-segment houses have increased from 47% in fourth quarter of 2008 to 57% during the corresponding period in 2009. “Regained buyer confidence in the residential market is the primary reason for such a demand shift,” points out Samir Jasuja, MD of PropEquity.
Knight Frank’s take
On the contrary, Pranab Datta, vice chairman and managing director of property consulting firm Knight Frank India, says, “Demand for affordable housing is still robust, whereas there has been a significant decline in supply as markets improved. Higher profit margins in mid-and high-end segments, coupled with exorbitant land prices are prompting developers to drift away from launching houses in the affordable segment.”
Mr Datta further adds that the future for affordable housing is bright as it will be the mainstay for developers over the coming years. If planned properly, together with strict adherence to delivery schedule, then developers will be able to reap benefits from low-cost housing, points out the Knight Frank MD.
Jeeta Bandopadhyay |
