The Union Budget has given a boost to the government’s efforts to lift affordable housing through tax incentives for the developers and bigger brands known for their premium projects are now entering the segment while existing players are to scale up their plans.
“The revival of the real estate is expected to take place from the bottom of the pyramid of affordable to low-cost housing. This has been the most disorganised segment in residential real estate so far. However, things are to change for better now with large and organised developers entering the market. Increase in the size to succeed for affordable units has made the whole thing more palatable,” said Shishir Baijal, CMD, Knight Frank India.
Listed companies like to enter value housing are Housing Development and Infrastructure (HDIL) and Sunteck Realty plan. Several other developers are also planning a venture into the segment. Sunteck Realty said it would invest up to Rs 1,000 crore over two years to develop these projects.
“Affordable housing is a mass housing subject with lower margins and therefore requires engineering, management and cost efficiency with low overheads. Developers must adopt a different skill set just like a factory model because there may not be too much of price rise in this category as the market is driven by the end users. With our last eight year’s experience in this segment, we have realised that this is more of a volume game than margins,” said Ashok Chhajer, CMD, Arihant Superstructures.