New launches in the affordable housing segment has seen a jump of 27 percent with Mumbai taking the lead. This follows the government’s decision to give infrastructure status to this asset class, says a new report by Cushman & Wakefield that covers top eight cities across the country.
More than 26,000 new units have been launched in 2017 so far under the category. Of the total new launches in affordable units, 40 percent were in Mumbai (10,500 units), followed by Kolkata and Pune. All other categories have seen a decline in high–end (-66 percent) and luxury (-84 percent) segments witnessing a significant drop in new launches, it said.
“Affordable housing is an attractive proposition both for developers and consumers as the demand is huge and largely unmet. The high focus of the central government has resulted in the availability of more funding options for the developers such as ECB, FDI and debt financing from national financial institutions at highly competitive rates. However, there are challenges for affordable housing projects in Tier 1 cities, where land costs and availability within established locations is very difficult,” says Anshul Jain, Managing director, India Cushman & Wakefield.
However, overall residential unit launches recorded a decline of 33 percent and was at approximately 60,000 units in the first three quarters of 2017 (January – September). All cities, except for Mumbai, saw a decline in new launches, mostly due to the introduction of Real Estate Regulatory Act (RERA) and GST implementation.
Further, the first quarter of the year had the rollover challenges of demonetization (November 2016) to grapple with leaving many developers no choice but to defer their launch plans.
With the government deciding to deliver 1.2 crore affordable houses by 2022, the affordable housing segment is expected to continue its momentum. The segment caters to the unmet demand of a large section of the Indian population looking for affordable housing options. To ensure that the momentum continues, the government could also explore adding a few incentives on land acquisition costs as land cost is the largest component of project costs.
Mumbai (+1 percent) saw the highest number of launches at over 19,400 new residential units till September 2017. Of the total launches in Mumbai, the affordable housing sector was close to 10000 units registering a rise of 300 percent over the same time last year. Mumbai was followed by Pune (8,400) and Bengaluru (8,200) both registering a year-on-year decline of 41 percent and 48 percent respectively in the total number of new residential units launched.
Chennai saw the steepest decline in new launches, which was lower by over 50 percent in YTD 2017 over the same time last year. The city only saw 2,700 new homes due to a massive slowdown in construction due to prolonged political uncertainty and delayed notification of RERA in the state.
Xrbia to launch 50,000 affordable housing units
Meanwhile, Xrbia Developers is planning to launch 50,000 affordable housing units in city centre locations across Mumbai and Pune in the fourth quarter of 2017. These new projects will be launched in Thane, Kandivali, Mira Road and Karjat in Mumbai whilst the projects in Pune will be launched at Balewadi, Dhanori and Market Yard.
The apartments will be priced at Rs 50 lakh for 1BHKs and Rs 80 lakh for 2BHKs. The 1BHKs will have a carpet area ranging from 180 to 230 sq. ft. and 2BHKs will be of 305 sq. ft. carpet area. Eligible customers with a yearly income of up to Rs 18 lakh will benefit from a government subsidy of up to Rs 2.67 lakh under the Pradhan MantriAwasYojna (PMAY) scheme.
“To meet our vision of delivering 100 future-ready cities by 2030”, Xrbia is committed to investing in innovative technologies to provide smarter, more efficient, and sustainable cities to our customers. It is important for a real estate brand to focus not only on today’s industry revolutions but also future needs of their customers,” says Rahul Nahar, founder, Xrbia Developers Ltd.