Economic slowdown, followed by
the fear of job losses, liquidity
crunch and increasing input costs, has crashed the market for
expensive houses in 2008. Despite the increasing demand for affordable
and low-cost housing and the huge potential of the segment, real estate
companies are eyeing innovative and affordable housing projects, especially in times
of economic slowdown. Estimates indicate that India has a shortfall of
more than 25 million houses, of which 97% is in the low-income group. Moreover,
the increasing urbanization projections of 600 million urban residents by
2030, from the current 328 million, present a lucrative market for low-cost
housing. This is the reason why top players like DLF, Unitech, Jaypee, Omaxe and
Tata Housing have all joined the affordable housing bandwagon. After realizing
the resident market dynamics, these players are changing their strategies
accordingly. Earlier, they used to tap only 5% of the market, which got saturated
during the slowdown. Building and selling affordable housing is the only way
for realtors to survive. Most of the realtors have realized the truth that less
profit is better than no profit and are eyeing the potential in affordable housing
and devising ways to revive their fortunes.
The Rs 65,000 cr real estate sector has started showing signs of
recovery, with the newfound mantra of affordable housing, or you could call it the
Nano effect. The industry is currently estimated to be around 5% of GDP and
to have a growth rate of 25-30% annually. A recent Assocham Business
Barometer (ABB) survey has found that the embattled realty majors see
positive signs of recovery taking place within the next quarter against increasing
low-cost housing demand and improved cash flows. According to a study
by PropEquity Research, 74% of residential apartment sales in Mumbai in
the first quarter of 2009 came from the low-cost segment. The trend was the
same in Gurgaon and Chennai too, where the corresponding numbers were 60%
and 58% respectively.
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