Recovery In Affordable Housing

By Author: Loknath Swain
Total Articles: 22
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The flexibility shown by developers in recent years in converting luxurious residential projects into smaller, inexpensive ones has helped the realty sector in many parts of India recover fast from last year’s recession.

The rise of a number of small developers offering cheap houses, and the easy availability of bank funding for both builders and buyers has also aided the recovery. A slump in the US market hit real estate worldwide in early 2006 and prices of residential projects crashed down. But, on the contrary the Indian market was only marginally affected.

However, this picture changed in late 2008, when the global economic slowdown started creating uncertainty over jobs in India as well and people became cautious about spending, and were reluctant to invest large sums of money in buying homes. The situation was exacerbated by falling investor confidence, and from their peak levels in 2007, real estate prices came crashing down by 30-40% during 2009. Today, however, the cycle has turned once again, at least in some parts of the country.

Experts said most of the launches in the latter half of 2009 ...
... were in the affordable housing segment that involves less amount of money to invest by developers. The trend has been encouraged by the emergence of smaller developers, which control a major portion of the market, particularly in Bangalore, Pune and New Delhi’s suburbs such as Noida and Ghaziabad. Another reason is easy availability of loans from major banks in India for the mushrooming of smaller builders and affordable houses.

But challenges remain. Rising land prices, for instance, can put paid to the developers’ ability to build affordable houses in the coming days and in order to get large ROI, they may again divert mainly towards luxurious residential projects.

ProjectWell, India's first and only Development Management Company in Real Estate in india.In cooperation with a world leader in industrial production of prefabricated structures, is now introducing this technology in India. This allows for the structure of a house located in 3 days, followed by about one month after the factory production.

Today's developers say that building "affordable homes" catering for buyers to Rs 30-35 lakh flat portion with an area of 1000 square feet in the Tier II cities. But strictly speaking, it is not a correction costs, and since this is still well above what most of the marginalized section of India can afford.

About Loknath Swain
Loknath Swain is a Mumbai based writer. He writes on subjects related to Real Estate in India and Affordable Housing