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Roof over common manís head written by Prasoon Chauhan, published in DNA. November 11, 2018

Real estate sector in India is at an inflection point as it is now used to the entire tectonic shift triggered by the implementation of RERA, GST and demonetization. Slowly and steadily, the sector has seen consistent growth in new launches and absorption of housing units over the past several quarters. Almost, all the realty pundits have been of similar view that the    -realty sector is now much leaner, organised and process-driven. They agree that the recent policy-level changes have separated wheat from the chaff.


As the Government of India zooms ahead with its Housing for All policy, affordable and mid-income housing, which will drive the growth, has enough demand across cities in India when offered with the right amenities and by renowned developers. In fact, affordable housing is one of the business segments in India where demand is much higher than supply. Rationally speaking, it is only logical for private developers to offer projects catering to meet this demand-supply gap.


The Indian government has also provided various benefits to promote affordable housing including &lsquoPradhan Mantri Awas Yojana&rsquo (PMAY) an initiative in which affordable housing will be provided to the urban poor with a target of building 20 million affordable houses.


Apartments qualifying under the PMAY scheme get various concessions like interest subvention under Credit Linked Subsidy Scheme (CLSS), concessions on GST etc. Developers help customers get these benefits which eventually reduce the cost of final ownership of home.


One critical aspect to ensure success of affordable housing for all initiatives, which was pointed out by Vice President of India M Venkaiah Naidu, is the need to bring in private sector. Real estate developers should take leadership in the long-term position in this housing segment.


Private developers across cities in India are now using the advantages received by the customers to launch projects in the affordable pricing segment. Almost all the housing finance companies (HFC) are now looking to and have been mandated to provide debt for affordable housing projects. And many of the leading Indian banks have created dedicated affordable housing private equity funds to invest in projects and in the companies catering to this segment as well.


This is a clear shift from a position 5-7 years ago when there were hardly takers to invest in affordable housing projects. Moreover, latest reports by independent property consultants (IPC) indicate that total absorption of housing units in India in the third quarter of 2018, has increased versus the previous quarter in the high single digit numbers.


Significant number of those sales were in the affordable segment. They indicated that there is demand for projects that are rightly located, priced and launched by renowned and branded developers. And in the coming quarters, this is expected to further grow.


Housing units ranging between Rs 30 and 70 lakh are at a sweet spot where a family income of Rs 50,000-Rs 80,000 per month can comfortably afford monthly instalments for their housing loans while taking benefits from various government schemes. Also, the market has been continuously recovering over the past few quarters. A substantial amount of ready stock available in the primary market has led to the market slowly transforming into a buyers&rsquo market.


Buyers&rsquo market is a good scenario for healthy competition as that will weed out fly-by-night operators and unorganised developers. This will lead to better construction quality, on-time project delivery, better after-sales services and healthy appreciations of residential units without creating any realty bubble.


Moreover, due to the sheer volume of units of affordable housing, India&rsquos next couple of decades of realty growth would be driven by affordable segment.


The market is also confident that this time around we would not witness policy and approval paralysis that we had witnessed during national elections in the past. As Indian customers get more mature, no political party can afford to slowdown the real estate growth that has been witnessed in the past few quarters. It is not surprising that housing sector&rsquos contribution to the Indian GDP is expected to reach 11 per cent by 2020 as several ancillary industries are co-dependent on the growth of housing sector in India.


This time around we are witnessing several state governments working in tandem with the Indian government to make affordable housing a success and a sustainable business model for private developers to forge ahead with the growth not in tier-1 cities but at pan-India level.


The Indian government has embarked on a journey to ensure that its Housing for All policy puts a roof over all Indians and future governments are expected to continue and further push this growth.



(Author is CEO, ATS HomeKraft)